On Wall Street Friday Technology stocks led a broad rally, capping another strong week for the market, as investors welcomed solid profits from Apple and other companies.
Since August posted its first back-to-back weekly gains and the S&P rose 500 2.5%. The tech-heavy Nasdaq composite climbed 2.9% and the Dow Jones Industrial average rose 2.6%. Lifting the Russell 2000 index by 2.3%, smaller company stocks also gained ground.
During the summer than expected Apple’s latest quarterly results showed the iPhone maker made even fatter profits. Its shares rose 7.6% and technology stocks led a rally that had largely been beaten up a day earlier.
Intel jumped 10.7% even though it said it saw “worsening economic conditions after delivering a much bigger profit than analysts forecasted”.
After they also topped Wall Street’s profit expectations Gilead Sciences soared 12.9%, and T-Mobile US gained 7.4%.
After new data showing the economy grew modestly in the third quarter and inflation eased a report on consumer investors also encouraged spending that came a day.
Quincy Krosby, chief equity strategist for LPL Financial said “You have an economy that almost refuses to keel over, an economy that at its core is resilient, that is what the Fed wants and that’s obviously what the market wants but at the same time inflation is easing”.
On Wall Street for a “pivot” by the Federal Reserve that’s helped fuel hopes, where the central bank dials down the big interest-rate hikes that have shaken the market. Though many analysts say such hopes may be overdone, such a move could boost the market.
On the side of going too far in order to tame inflation the central bank has been very clear about its plan to err, which means the big gains on hopes of a pullback seem premature, Liz Young, chief investment strategist at SoFi said.
Young said “This rally has now gotten a bit irrational and fragile at this level”.
The S&P 500 rose 93.76 points to 3,901.06. The Dow gained 828.52 points to 32,861.80. The Nasdaq rose 309.78 points to 11,102.45. The Russell 2000 gained 40.60 points to 1,846.92.
Though the bag remains decidedly mixed, many big U.S. companies have been reporting stronger earnings than expected.
For Amazon on Friday solid earnings helped to offset a 6.8% drop, which offered for upcoming revenue a weaker-than-expected forecast.
To take a beating this week after reporting some discouraging trends it was the latest Big Tech company. With seemingly unstoppable growth after the group dominated Wall Street it’s a sharp turnaround for years.
After reporting a second straight quarter of revenue decline amid falling advertising sales and stiff competition from TikTok Meta Platforms lost nearly a quarter of its value, earlier in the week. In key areas Microsoft and Google’s parent company also reported slowdowns.
This week such woes have created a sharp split on Wall Street, between lagging Big Tech stocks and the rest of the market. This week the Nasdaq, which is stuffed with high-growth tech stocks, notched a 2.2% gain.
It would have had an even worse showing if not for Apple’s boost from Friday. Meanwhile, The Dow, jumped 5.7% for the week because it has less of an emphasis on tech.
Rising interest rates have hit Big Tech stock prices harder than the rest of the market, and the pressure increased Friday as yields climbed.
“In a place where an earnings recession is possible the markets still seem to not want to believe that we might end up,” Young said.
During the summer were in line with economists’ expectations data released in the morning showed the raises that U.S. workers got in wages and other compensation.
To keep hiking rates sharply in hopes of weakening the job market enough to undercut the nation’s high inflation that should keep the Fed on track.
U.S. households continue to spend more in the face of it and other data showed the Fed’s preferred measure of inflation remains very high.
To starve inflation of the purchases made by households and businesses needed To keep it high the Fed is trying. It’s doing that by intentionally slowing the economy and the jobs market. The worry is that it could go too far and cause a sharp downturn.
Up to a range of 3% to 3.25% up from virtually zero in March the Fed has already raised its benchmark overnight interest rate. Before it potentially makes a smaller increase in December, the widespread expectation is for it to push through another increase that’s triple the usual size next week.
For stocks and other investments they also hurt prices, higher rates not only slow the economy.
The yield on the two-year Treasury, which tends to track expectations for Fed action, rose to 4.42% from 4.28% late Thursday.
Climbed to 4.01% from 3.93%, the 10-year yield, which helps set rates for mortgages and many other loans.
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