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S&P 500 climbs to its biggest quarterly gain in a decade; Lyft jumps

Lyft IPO lifted by service's popularity

Stocks finished broadly higher on Friday as Wall Street closed out the first quarter with the market's biggest gain in nearly a decade. The benchmark S&P 500 index is now up 13.1 percent this year.

That marks a drastic turnaround for stocks after a jarring 14 percent sell-off in the last three months of 2018. The market's blockbuster quarter shared the spotlight with Lyft's much-anticipated trading debut on the Nasdaq stock exchange. The ride-hailing company's shares finished at $78.29, or 8.7 percent above its offering price of $72.

New data pointing to lower inflation and renewed optimism among investors that the trade talks between the U.S. and China are making progress helped drive the rally. Bond yields also continued to rise from recent lows, easing concerns about a steep drop in long-term yields heading into this week. Some investment strategists said the market's first-quarter performance could bode well. 

"A big start to the year historically has suggested the bulls could remain in charge the rest of the year," said LPL Senior Market Strategist Ryan Detrick in a research note. "In fact, 9 of the past 10 times the S&P 500 was up at least 10 percent during the first quarter, the rest of the year was also in the green."

The S&P 500 index gained 18.96 points, or 0.7 percent, to 2,834.40. The index also notched a gain for the week.

"Low interest rates, low inflation, possibly better trade, that's enough here to move the market higher," said Mile Baele, senior portfolio manager at U.S. Bank Wealth Management. "It's been some time since we've had some enthusiasm in the IPO market, and that might be helping the markets today as well."

Stock rebound

The Dow rose 211.22 points, or 0.8 percent, while the Nasdaq composite added 60.16 points, or 0.8 percent. The Russell 2000 index of smaller company stocks picked up 4.63 points, or 0.3 percent. Major indexes in Europe and Asia closed higher on Friday.

The Dow ended the quarter with an 11.2 percent gain, while the Nasdaq is up 16.5 percent. The Russell 2000 is 14.2 percent higher this year.

The U.S. stock market rebounded strongly in the first quarter after closing out 2018 with a steep sell-off. The S&P 500's technology sector powered much of those gains, climbing 19.3 percent over the last three months.

The Federal Reserve sparked the rebound by announcing a more patient approach to further interest rate hikes. The move reassured investors, who'd worried that the Fed would continue to raise rates amid signs of a slowing global economy.

"As disappointing and perhaps shocking as the sell-off in the fourth quarter was, with the Fed getting out of the way, the rebound has been equally as shocking," said Baele. "Essentially, we're just back to where we were in October."

10-year bull market

The first-quarter's strength helped prolong the bull market for U.S. stocks, which marked its 10th anniversary in March, and is now the longest ever.

The last time the S&P 500 index turned in a better quarterly performance was in the third quarter of 2009, when it climbed about 15 percent.

Friday's gains followed a broad rally in global stocks as investors hoped for progress in U.S.-Chinese trade talks. U.S. Treasury Secretary Steven Mnuchin called the U.S.-China trade talks "constructive" and said in a tweet Friday that he looked forward to continuing the talks in Washington next week.

Lyft's IPO

Lyft's market debut marked the first time a U.S. ride-hailing company sold shares to the public.

Investors clamored to get in on the action in the days leading up to the IPO, despite the company's history of losses. That prompted Lyft to raise its target price to $72 per share from an initial range of $62 to $68.

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Signage for Lyft is seen displayed at the NASDAQ MarketSite in Times Square in celebration of its initial public offering (IPO) on the NASDAQ Stock Market in New York, U.S., March 29, 2019. Shannon Stapleton / REUTERS

Traders' enthusiasm boosted Lyft's shares 20 percent above their offering price in the first few minutes after they began trading. The shares ended the day 8.7 percent higher.

The company said it raised more than $2 billion in the IPO, which it plans to use in its heated competition with archrival Uber. Lyft sold 32.5 million shares in the offering, above the nearly 31 million that it had targeted in its regulatory filings leading up to Thursday evening's pricing.

Technology and health care companies drove much of the market's gains Friday. Micron Technology rose 5.1 percent and Celgene jumped 7.9 percent.

Industrial sector companies notched solid gains as shares in several airlines climbed. American Airlines Group gained 2.8 percent, Southwest Airlines added 2.9 percent and Delta Air Lines picked up 2.6 percent.

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