(Bloomberg) — Wall Street breathed a sigh of relief as the world's biggest technology companies lifted their stock prices and the latest inflation data was broadly in line with expectations.
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Stocks were heading for their best week in 2024 as Microsoft and Google's parent company Alphabet sent a clear message to investors that spending on artificial intelligence and cloud computing is paying off. This was a positive signal for many traders who had doubts whether the bull market mainstay could meet the high standards set for the industry.
UBS Global Wealth Management's Solita Marcelli said the latest results from big technology companies reinforced the group's strong fundamentals and helped offset concerns about the macroeconomic backdrop.
“I would like to continue to emphasize that tech fundamentals remain strong and the recent correction provided an interesting entry point for tech and AI stocks, especially with large tech stocks in the first quarter,” Marcelli said. Stated.
The S&P 500 index hit 5,100, with Microsoft and Google's parent company Alphabet leading the mega-cap gains. The yield on the 10-year Treasury note fell 3 basis points to 4.68%. The yen's decline widened to 157 yen to the dollar, raising speculation that the authorities might intervene to stop the decline.
To Clark Bellin of Bellwether Wealth, Friday's PCE paper says a rate cut in 2024 is on the table, but likely towards the end of the year, with the Fed analyzing some more inflation reports You will be able to do it.
“I believe the stock market can weather the rise in interest rates as earnings remain quite strong and companies are figuring out how to grow in this high interest rate environment,” he said. “Investors will welcome lower interest rates, but the market could continue to rise even if we don't see a rate cut this year.”
Belin said investors should continue to keep an eye on market opportunities and consider taking advantage of the recent pullback, where “a lot of blue-chip stocks have been sold.”
“The new inflation numbers were gaining weight, and the market needed 'in-line' statistics to confirm that the Fed wasn't starting to lose this battle,” said John Kirshner of Janus Henderson Investors. Stated. “Inflation remains too high for the Fed to feel comfortable, but if developments continue, it may be reasonable to expect one, perhaps two rate cuts in 2024.”
The U.S. stock market will continue to rely on a small number of megacap stocks for direction until higher real interest rates raise fears of a recession, according to Bank of America strategists led by Michael Hartnett.
Either real 10-year yields (interest rates adjusted to reflect the actual cost of funds) rise to around 3%, “or the combination of rising yields and widening credit spreads threatens a recession.” They write that their focus will be maintained until then.
Rising inflation-adjusted bond yields are seen as a proxy for tighter financial conditions and are a common way stock market bubbles burst.
Company highlights:
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Microsoft Corp. and Google parent Alphabet Inc. sent a clear message to investors Thursday: Our spending on artificial intelligence and cloud computing is paying off.
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Intel, the largest maker of personal computer processors, gave a lackluster outlook for the current fiscal year, indicating it is still struggling to return to the top tier of the chip industry.
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Snap Inc. says its efforts to revamp its digital advertising business are gaining popularity among marketers, a positive sign as revenue increases and competition from powerhouses Google and Meta Platforms Inc. intensifies. showed that.
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Exxon Mobil and Chevron fell after disappointing first-quarter results.
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AbbVie Inc. raised its full-year profit outlook as new anti-inflammatory treatments such as Rinvoke and Skyridi replace Humira, the blockbuster arthritis drug that fueled the company's growth for more than 15 years.
The main movements in the market are:
stock
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As of 1:26 p.m. New York time, the S&P 500 was up 1.3%.
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Nasdaq 100 rose 1.9%
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The Dow Jones Industrial Average rose 0.6%.
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MSCI World Index rose 1.1%
currency
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Bloomberg Dollar Spot Index rose 0.3%
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The euro fell 0.3% to $1.0695.
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The British pound fell 0.2% to $1.2487.
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The Japanese yen fell 1.4% to 157.77 yen to the dollar.
cryptocurrency
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Bitcoin fell 1.6% to $63,747.01.
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Ether fell 1.4% to $3,130.18.
bond
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The 10-year Treasury yield fell 3 basis points to 4.68%.
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Germany's 10-year bond yield fell 6 basis points to 2.57%.
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UK 10-year bond yields fell 4 basis points to 4.32%.
merchandise
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West Texas Intermediate crude rose 0.3% to $83.85 per barrel.
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Spot gold rose 0.2% to $2,336.24 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Michael Msika.
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