Big tech lifts Wall St. to best week in 6 months
The best week for U.S. stocks since November closed out with more gains thanks to Alphabet and Microsoft on Friday.
The Standard & Poor’s 500 index rallied 1% to finish its first winning week in the last four. The Dow Jones industrial average rose 0.4%, and the Nasdaq composite jumped 2%.
Alphabet leaped 10.2% after breezing past analysts’ expectations for profit last quarter. The parent company of Google also said it will start paying a dividend to investors and authorized a program to buy back up to $70 billion of its stock, a signal of how much cash it’s generating.
Microsoft climbed 1.8% after reporting strongerthan-expected profit and revenue. It cited strong growth in its cloud-computing business as it pushes artificial-intelligence technology to its customers.
They helped offset a 9.2% drop for Intel. It reported stronger-than-expected profit for the latest quarter, but its revenue fell short of analysts’ estimates. So did its forecast for profit in the current quarter.
Stocks have broadly been under pressure this month after hopes withered for multiple interest rate cuts this year by the Federal Reserve. A series of reports this year showing inflation remaining worse than forecast has traders expecting maybe one cut this year, down from forecasts for six or more at the start of the year.
Yet another report Friday showed inflation remaining stubbornly high. This time it was the measure of prices for March that the Federal Reserve prefers to use, but it wasn’t much worse than forecasts. Financial markets took it much more in stride than a report from the day before that suggested the same measure of inflation rose quickly from January through March.
Treasury yields largely eased in the bond market after Friday morning’s report. The yield on the 10-year Treasury fell to 4.66% from 4.71% late Thursday. The two-year Treasury yield, which more closely tracks expectations for the Fed, held steadier. It edged down to 4.99% from 5.00%.
Although inflation has remained hotter than forecast, EY Chief Economist Gregory Daco expects it to cool in coming months as shoppers pressured in part by slowing growth in wages tamp down their purchases, which is the fuel that gives inflation energy. “Consumers remain willing to spend, but not on anything, nor at any price,” he said.
Economists also said the weaker-than-expected reading on the overall U.S. economy from Thursday, which helped send stocks sliding, may not be as bad as it seemed on the surface.
“The economy remains on solid footing,” Bank of America economists said in a report, pointing to solid buying trends from U.S. customers. Such an interpretation calms worries that the U.S. economy could be heading for a toxic mix of stagnating growth and high inflation, something that the Federal Reserve doesn’t have great tools to fix.
All told, the S&P 500 rose 51.54 points to 5,099.96. The Dow added 153.86 points to close at 38,239.66, and the Nasdaq gained 316.14 points to 15,927.90.