Stocks climbed after strong economic data added to evidence the recovery is gaining momentum, with traders also assessing a batch of corporate earnings. The dollar retreated.

Most major groups in the S&P 500 advanced, led by financial and material shares. A gauge of smaller companies outperformed major benchmarks, while Tesla Inc. and Apple Inc. paced gains in megacap stocks. Blue chips Honeywell International Inc., American Express Co. and Intel Corp. weighed on the Dow Jones Industrial Average after their quarterly results.

Equities whipsawed this week amid a flare-up in global coronavirus cases and news that the White House plans to propose almost doubling the capital-gain tax rate for the wealthy. Investors also waded through corporate outlooks and economic readings, with data showing U.S. new-home sales rebounded in March to the highest since 2006. Meanwhile, output at manufacturers and service providers reached a record high in April.

“It’s evident the U.S. economy continues to be on the right track,” Jeff Schulze, investment strategist at ClearBridge Investments, said this week. “What the market is going to be looking for is continued economic momentum. This is the beginning of a more sustained move toward value and cyclicals.”

Other corporate highlights:

• Kimberly-Clark Corp., the maker of Scott toilet paper, reported a steep sales decline that signaled the potential end of a boon triggered by the pandemic.
• Schlumberger, the world’s biggest crude contractor, said it expects a gradual recovery of oil demand to boost overseas work through the end of this year.

Comparing U.S. stocks to high-yield bonds makes equities “look less stretched,” according to Jeroen Blokland, a manager of multi-asset funds at Robeco. While the Cboe Volatility Index, or the VIX, set a 14-month low last week, the yield spread for the Bloomberg Barclays U.S. Corporate High-Yield Index reached its narrowest since July 2007 in the previous week.

“Equities are relatively attractive versus high yield” on this basis, he wrote in a blog post.

These are some of the main moves in markets:

Stocks

• The S&P 500 rose 1.1 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 1.3 per cent
• The Dow Jones Industrial Average rose 0.7 per cent
• The MSCI World index rose 0.9 per cent
• The Russell 2000 Index rose 1.8 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.4 per cent
• The euro rose 0.7 per cent to US$1.2099
• The British pound rose 0.3 per cent to US$1.3885
• The Japanese yen was little changed at 107.90 per dollar

Bonds

• The yield on 10-year Treasuries advanced two basis points to 1.56 per cent
• Germany’s 10-year yield was little changed at -0.26 per cent
• Britain’s 10-year yield was little changed at 0.74 per cent

Commodities

• West Texas Intermediate crude rose 1.1 per cent to US$62 a barrel
• Gold futures fell 0.3 per cent to US$1,776 an ounce

--With assistance from Emily Barrett, Joanna Ossinger, Cecile Gutscher and Vildana Hajric.