Stock Market Today: Stocks Race to Best Weekly Gains Since 2020

Friday had little to add to a week of big developments that included the Federal Reserve's first rate hike since 2018 and a slew of improving economic indicators. But it did tack on more equity gains to an already fruitful week.

Today, President Joe Biden sought to dissuade China from aiding Russia in its invasion of Ukraine, laying out potential economic and political consequences to his Chinese counterpart, Xi Jinping, in a nearly two-hour phone call.

Also Friday, the National Association of Realtors said existing-home sales declined in February, by 7.2% to a 6.02 million-unit pace. But Wells Fargo strategists warn that "while it is tempting to blame rising mortgage rates for February's larger-than-expected drop, the decline continues a recent pattern with annualized sales bouncing around from month-to-month."

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Technology (+2.1%) and consumer discretionary stocks (+2.1%) continued their relief rally Friday, helping the major indexes maintain their momentum heading into the weekend.

The Dow Jones Industrial Average (+0.8% to 34,754), S&P 500 (+1.2% to 4,463) and Nasdaq Composite (+2.1% to 13,893) all finished with their heads well above water.

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That resulted in weekly 5.5% and 6.2% gains for the Dow and S&P 500, respectively, both of which enjoyed their best weekly improvements since November 2020. That also was true of the Nasdaq, which closed out the week up 8.2%.

Other news in the stock market today:

• The small-cap Russell 2000 closed 1.0% higher to 2,086.
• U.S. crude oil futures improved by 1.7% to finish at $104.70 per barrel, ending the week with a 4.2% gain.
• Gold futures declined 0.7% to settle at $1,929.30 per ounce, posting a 2.8% weekly loss.
• Bitcoin strengthened into the close, climbing by 3.3% to $42,240.62. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
• Boeing (BA, +1.4%) shares closed in the green amid a Reuters report that the firm is nearing a deal with Delta Air Lines (DAL) to secure as many as a hundred 737 Max 10 jets, according to people familiar with the matter. Reuters notes this would be "the first order from Delta for Boeing's best-selling single-aisle airplane family, and the first major Boeing order for the carrier in a decade."

Use Big Dividends to Battle High Inflation

One clear takeaway from this week: Higher interest rates are here, and more of the same is on the way.

"Coming exactly one week after the end of the quantitative easing (QE) process, the Fed is embarking upon a clear move higher in rates and is signaling future balance sheet reductions (likely beginning sometime in the summer)," says Rick Rieder, BlackRock's chief investment officer of global fixed income. "Many economic projections had the Fed not hiking rates until late 2023 and maybe not until 2024, and more recently, projections for 2022 rate hikes surged from no hikes to seven hikes by many."

That includes Kiplinger, which expects six more quarter-point hikes by 2022's end.

We mentioned earlier this week that dividend growth is one way to position your portfolio for outperformance in such an environment. Another related tactic is to seek out high overall yield – investments that throw off so much income that rising rates on bonds are still little match for them.

Indeed, research from ETF provider Global X notes that "in 7 out of the 10 rising interest rate periods since 1960, high dividend stocks outperformed the S&P 500."

High-single-digit dividends can be found in several market niches, like master limited partnerships (MLPs) or mortgage real estate investment trusts (mREITs). There are only a few dozen publicly traded options for these, but their special business structures or underlying rules allow them to deliver oversized dividends.

Another particularly interesting source of high yield is the business development company (BDC) – a private equity-esque company designed to provide capital to small and midsized businesses, and that, like REITs, must distribute at least 90% of taxable income back to shareholders as dividends. Here, we look at five BDCs yielding between 6.2% and 11.6%.