Stocks rallied at the end of a week marked by intense gyrations as strong earnings from Apple Inc. lured dip buyers, overshadowing fears that the Federal Reserve will have to act aggressively to thwart the fastest inflation since the 1980s.

The S&P 500 notched its biggest rally since June 2020, erasing its weekly losses. The tech-heavy Nasdaq 100 -- which is still set for its worst month since 2008 -- jumped more than 3 per cent. The iPhone maker soared on results that sailed past Wall Street estimates, marking a victory against a supply-chain crunch fueled by the pandemic. Bitcoin rallied.

“Given recent volatility, there is a hope corporate earnings can stabilize markets,” said Lindsey Bell, chief markets and money strategist at Ally. “Investors hope that market fundamentals, like earnings results, can shift the focus away from fears of central bank policy changes and inflation. It might take a lot of good news to change the tone on Wall Street, though.”

Markets have whipsawed since Fed Chair Jerome Powell signaled faster tightening, adding to investor concerns about geopolitical tensions and a slowdown in earnings. BlackRock Inc.’s strategist Scott Thiel warned that the central bank risks a hawkish policy mistake as it strives to extinguish price pressures largely caused by the chaos in supply chains. Meantime, Bank of America Corp. strategists led by Michael Hartnett cited “zero capitulation in equity positioning.” The analysts, who track EPFR Global data, said stock mutual funds and exchange-traded products took in US$17.1 billion in the week to Jan. 26 -- the day when the Fed announced its policy decision.

Equities are still the best game in town, according to Goldman Sachs Group Inc. That’s because stock valuations are “nowhere near” where they were at the height of the dotcom bubble two decades ago, said Sharmin Mossavar-Rahmani, head of the bank’s investment strategy group. Unlike in the late-90s, the U.S. equity market today has broad-based returns and its corporate earnings are fundamentally strong, she said.

Despite the fears that Fed tightening will snuff out growth, earnings sentiment has stayed firm. Analysts have raised their 2022 profit estimates by roughly US$1 to US$221.4 a share this year. About 80 per cent of companies that have reported earnings so far this season have beaten projections. While S&P 500 profits were estimated to expand 22 per cent in the fourth quarter -- half the rate seen in the previous period -- that’s still more than twice as fast as the 10-year average, according to data compiled by Bloomberg Intelligence.

Meanwhile, a slew of U.S. inflation measures out Friday underscored the breadth of price pressures and reinforced the Fed’s urgency to begin boosting rates. The two biggest U.S. banks raised their forecasts on how quickly the central bank will hike this year, with Bank of America predicting a move at every meeting. JPMorgan Chase & Co. separately lifted its call to five increases in 2022 from four previously.

Other corporate highlights:

• Visa Inc. reported earnings that topped the average analyst estimate.
• Caterpillar Inc.’s earnings beat estimates as surging demand and higher prices for diggers, bulldozers and trucks muted the impact of rising raw-materials costs.
• Chevron Corp. posted disappointing profits after slumping values for some long-held fields hurt the oil giant’s ability to take full advantage of surging energy prices.
• Robinhood Markets Inc.’s revenue that fell short of Wall Street estimates as equities trading declined and gave a disappointing outlook.

In geopolitical news, the Biden administration held discussions with the country’s largest banks on possible sanctions against Russia as part of its efforts to ensure such actions won’t disrupt the global financial system. Tensions have soared after Russia amassed tens of thousands of troops on Ukraine’s border. While officials in Moscow have repeatedly said they have no intention of invading the country, Western allies are discussing a variety of measures should activity escalate.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 2.4 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 3.2 per cent
• The Dow Jones Industrial Average rose 1.7 per cent
• The MSCI World index rose 1.5 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at US$1.1149
• The British pound was little changed at US$1.3394
• The Japanese yen was little changed at 115.26 per dollar

Bonds

• The yield on 10-year Treasuries declined two basis points to 1.78 per cent
• Germany’s 10-year yield advanced one basis point to -0.04 per cent
• Britain’s 10-year yield advanced two basis points to 1.24 per cent

Commodities

• West Texas Intermediate crude rose 0.7 per cent to US$87.21 a barrel
• Gold futures fell 0.3 per cent to US$1,789.20 an ounce