“A rising tide lifts all boats.” You’ve probably heard that phrase many times. First said by President John F. Kennedy (courtesy of his eloquent speechwriter Ted Sorensen), the words became a mantra among the free market libertarians (aka, supply siders) of the Reagan era.

During the stock market’s rally since the spring of 2020, that rising tide had been dovish Federal Reserve policy, historically low interest rates, and unprecedented fiscal stimulus. Now the tide is receding, which brings to mind another saying, uttered by Warren Buffett: “Only when the tide goes out do you discover who’s been swimming naked.”

During this earnings season, we’ve been discovering who’s swimming naked. Earnings misses from Alphabet (NSDQ: GOOGL), Amazon (NSDQ: AMZN), and Boeing (NYSE: BA) have revealed slumping demand and supply chain woes among these blue-chips that bode poorly for their future quarters. It’s not just missing expectations in the most recent quarter; their projected outlooks have been grim as well.

However, we’re seeing bifurcation among well-known large-caps, with some companies faring poorly, and others showing resilience because of strong cash flow and pandemic-resistant customer demand. These hardy stocks are keeping the broader market afloat…for now.

U.S. stock markets sharply rebounded Thursday, led by the technology-focused NASDAQ, amid robust earnings reports from bellwether tech giants such as Meta Platforms (NSDQ: FB), the Facebook parent. After the bell, Apple (NSDQ: AAPL) posted strong results. Earlier this week, Microsoft (NSDQ: MSFT) also beat expectations.

These positive results from the beleaguered tech sector are boosting overall market sentiment. European and Asia equities have been bouncing back as well, encouraged by resumption of the risk-on mood in the U.S.

The U.S indices on Thursday soared as follows: the Dow Jones Industrial Average +1.85%; the S&P 500 +2.47%; the NASDAQ +3.06%; and the Russell 2000 +1.80%.

After the opening bell in early trading Friday, the major indices were trading mostly lower. The roller-coaster ride continues.

Treasury yields have been edging higher this week, with the benchmark U.S. 10-year yield back up to 2.91% as of Friday morning, after falling to 2.75% levels earlier this week.

Friday marks the last trading day of April, which is shaping up to be the worst month for the S&P 500 (down 5.3%) since the nadir of the pandemic-caused trough of March 2020. However, considering headwinds such as Fed tightening, soaring inflation, and the Russia-Ukraine war, it’s remarkable that stocks have not fallen off a cliff.

The NASDAQ is trying to mount a comeback, gaining traction after a nearly 20% plunge this year. Many inherently strong tech stocks are oversold and ripe for bargain hunting.

The economy: positive underlying trends…

The U.S. Commerce Dept. reported Thursday that the country’s gross domestic product (GDP) declined by 1.4% in the first quarter on a year-over-year basis, falling short of consensus expectations of a 1% gain (see chart).

Impeding U.S. GDP growth were such factors as lower net exports, sluggish inventory build, and less fiscal spending

But the financial markets shrugged off the report, deducing that the Q1 drop would only be temporary as headwinds dissipate later this year.

To be sure, if you look underneath Q1 GDP data, you’ll see many positives. Household and business spending remained strong, with personal consumption rising by 2.7% for the quarter. Personal income increased $107.2 billion, or 0.5% at a monthly rate, while consumer spending increased $185 billion, or 1.1% in March.

My expectation is that second quarter U.S. GDP is likely to show strength. At the same time, corporate earnings this season have been beating expectations.

As of this writing, roughly 40% of S&P 500 companies have posted operating results. Among these, 79% have reported a surprise on the upside, and year-over-year earnings growth is on course to reach about 7% this quarter, exceeding previous forecasts of 5%.

I remain (cautiously) bullish for the stock market for the rest of this year. But you should expect plenty of volatility along the way.

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John Persinos is the editorial director of Investing Daily.