(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 had 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 Sorita Marcelli said the latest results from major 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 closed near 5,100, and the tech-heavy Nasdaq 100 rose nearly 2%. The 10-year U.S. Treasury yield fell 4 basis points to 4.67%. The dollar rose.
To Clark Bellin of Bellwether Wealth, Friday's inflation report puts a rate cut on the table in 2024, but looks increasingly likely towards the end of the year.
“I believe the stock market will be able to weather the rise in interest rates as earnings remain fairly strong and companies continue to find ways to grow in this high interest rate environment,” he said.
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 in importance, and the market needed 'inline' 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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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 developments in the market are:
stock
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As of 4 p.m. New York time, the S&P 500 was up 1%.
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Nasdaq 100 rose 1.7%
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The Dow Jones Industrial Average rose 0.4%.
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MSCI World Index rose 0.9%
currency
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Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.3% to $1.0700.
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The British pound fell 0.1% to $1.2498.
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The Japanese yen fell 1.4% to 157.90 yen to the dollar.
cryptocurrency
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Bitcoin fell 1.6% to $63,767.27.
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Ether fell 1.2% to $3,135.52.
bond
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The 10-year Treasury yield fell 4 basis points to 4.67%.
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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 oil is little changed.
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Spot gold rose 0.3% to $2,339.99 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Michael Msika.
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