Stocks rose as a solid earnings season kept the market afloat despite bets the Federal Reserve will be forced to leave interest rates higher for longer.

After pulling back for the most part in April, equities are staging a rebound toward the end of the month. Early results from the reporting season suggest that over 80% of US companies are beating analyst expectations. First-quarter earnings are now on track to increase by 4.7% from a year ago, compared with the pre-season estimate of 3.8%, according to data compiled by Bloomberg Intelligence.

Following strong results from its “Magnificent Seven” counterparts, Amazon.com Inc. may join the pack this week with a jump in sales. Apple Inc. had a tougher time, with revenue and profit expected to be lower as iPhone sales slid. Chipmakers Advanced Micro Devices Inc. and Qualcomm Inc. probably eked out revenue growth.

“Last week, Big Tech enthusiasm outweighed concerns about sticky inflation,” said Chris Larkin at E*Trade from Morgan Stanley. “This week, we’ll find out if Amazon and Apple can keep that momentum going, but traders will also be taking the temperature of the latest jobs data and what the Fed has to say about inflation and rate cuts.”

The S&P 500 reclaimed its 5,100 mark. Tesla Inc. soared over 10% after receiving in-principle approval from Chinese government officials to deploy its driver-assistance system in the world’s biggest auto market. Apple Inc. rallied on a bullish analyst call.

Treasury 10-year yields declined five basis points to 4.62%. The yen climbed after touching its weakest level against the dollar in 34 years, amid speculation the Japanese government intervened to support its beleaguered currency for the first time since 2022.

Investors are faced with a call on whether the weakness in stocks seen earlier this month was only a blip or if delayed policy easing will pull the market back down again. The answer may lie in the market playbook of the 1990s, when equities more than tripled in value despite years of rates that were hovering around current levels.

“One of the important things investors learned last week is that the economy is less sensitive to interest rates in this cycle,” said Jeff Roach at LPL Financial. “The Fed is ‘backed into a corner’ as some sectors of the economy appear immune to interest rates.”

At this rate, Roach expects the Fed to stay on hold longer than would happen in a normal cycle, “which increases the odds of either stagflation or a bumpy landing.”

Markets could remain volatile this week, but UBS’s Chief Investment Office continues to see the current environment as supportive for US equities — driven by solid earnings growth, a potential Fed pivot later this year, and accelerating AI investment.

“We remain constructive on US equities, and expect AI-related companies to drive strong earnings growth in the years ahead,” said Solita Marcelli at UBS Global Wealth Management. “It is key for investors to hold a healthy strategic allocation to tech stocks, but also advocate diversified exposure across regions and sectors.”

Meantime, Morgan Stanley’s Michael Wilson said the pressure from higher Treasury yields is taking the shine off an upbeat earnings season for Corporate America.

The strategist noted that although the share of companies beating analysts’ profit estimates was “strong,” the reaction in share prices was still muted as valuations were inflated following a record-breaking rally this year.

This article was provided by Bloomberg News.