Stocks shake off wobbly start as investors weigh earnings

U.S. stocks moved higher in afternoon trading Thursday after shaking off an early pullback as investors weigh the latest batch of corporate earnings reports and economic data.

A report showing that the U.S. economy grew sharply in the first quarter is among the latest data pointing to a diminishing impact from the pandemic. Other upbeat reports included data showing that more Americans were signing contracts to buy homes in March after two months of declines.

The S&P 500 index was up 0.5% as of 2:16 p.m. Eastern, with gains by communication and financial companies outweighing a slide in health care and technology stocks. The Dow Jones Industrial Average was up 157 points, or 0.5%, to 33,975 and the Nasdaq added 0.1%.

Big risks to the market include rising inflation getting out of hand and any aspect of the virus pandemic worsening and throwing off the economic recovery, said Keith Buchanan, senior portfolio manager at Globalt Investments.

"Without one of those two, the macroeconomic direction seems clear," he said.

Investors got a dose of big technology earnings overnight from the likes of Apple, Facebook, Qualcomm and others. Tech stocks drove much of the rally in 2020 and are still highly valued to investors, who are betting that the pandemic made a permanent shift in how Americans shopped and entertained themselves.

Facebook jumped 7% after the social media giant reported stronger-than-expected results for the first quarter thanks to soaring ad revenue.

Auto companies fell sharply after Ford warned that a worsening global computer chip shortage could cut its production in half during the current quarter. Ford fell 7.6% and General Motors fell 3%.

Ride-sharing and delivery service companies also dropped following a report that Labor Secretary Marty Walsh wants gig workers to be classified as employees. DoorDash fell 8.1%, Uber lost 5.8% and Lyft sank 10%.

On the economic front, the Commerce Department said that the U.S. economy grew at a brisk 6.4% annual rate in the last quarter. That acceleration is expected to increase through the summer as more vaccinations are administered and COVID-19 cases continue to fall. Meanwhile, the Labor Department said the number of Americans who filed for unemployment benefits fell again last week.

In his speech Wednesday evening, President Joe Biden ticked off details of some of his plan for $1.8 trillion in spending to expand preschool, create a national family and medical leave program, distribute child care subsidies and more.

The plan comes on top of his proposal for $2.3 trillion in spending to rebuild roads and bridges, expand broadband access and launch other infrastructure projects.

The strong economic reports bond yields higher. The yield on the 10-year Treasury note rose to 1.65% from 1.62% the day before.