4/29/2024

US tech stocks rise after reports

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Key points:

  • Strong quarterly reports from Alphabet and Microsoft were the main driving force of the market.
  • Alphabet shares soared 10%, Microsoft shares rose 1.8%.
  • US monthly inflation rose modestly year-on-year in March, in line with forecasts.

On Friday, the US stock exchange showed positive dynamics after the publication of strong quarterly reports from Alphabet and Microsoft, as well as against the backdrop of encouraging data on inflation. The growth of shares of technology giants has become the main driving force of the market. Strong quarterly results eased investor concerns about slowing growth in the technology sector.

The Dow Jones Industrial Average added 153.86 points, or 0.40%, to 38,239.66. The S&P 500 rose 51.54 points, or 1.02%, to 5,099.96. The Nasdaq Composite Index gained 316.14 points, or 2.03%, to 15,927.90.

Google has grown by 10%

The US stock market posted strong gains, helped by strong quarterly results from Alphabet and Microsoft, as well as Alphabet’s first-ever dividend.

Shares of Google parent Alphabet soared 10% to a record high after the company announced a $0.20 per share dividend, a $70 billion share buyback program and posted better-than-expected quarterly earnings. Alphabet’s market capitalization exceeded $2 trillion for the first time.

Microsoft shares rose 1.8% after the company reported growth in revenue and profit in the third quarter, driven by the introduction of artificial intelligence in cloud services.

The results from Alphabet and Microsoft allayed investor concerns about rising data center and AI spending previously reported by Meta. Other mega-cap stocks also posted gains: Amazon.com (+3.4%), Nvidia (+5.8%) and Meta Platforms (+0.4%). The exceptions were Apple (-0.3%) and Tesla (-1.1%).

Intel’s weak results, caused by falling demand for chips for data centers and PCs, led to a decline in the company’s stock price by 9.1%. By the way, the decline of Intel is a striking example of why technology companies should still invest in the development of artificial intelligence and its implementation in their products.

At the end of the day, 6 out of 11 S&P 500 sectors closed in positive territory, with the communication services sector and the technology sector leading the gain. The S&P 500 and Nasdaq indices posted their biggest weekly gains since early November 2023. The S&P 500 broke a streak of three weeks of decline, and the Nasdaq broke a streak of four.

Nonfarm payrolls ahead

The US Commerce Department released data showing a slight increase in inflation in March compared to the previous year. This figure is in line with forecasts and brings some relief to financial markets worried about the risk of stagflation.

Let us recall that yesterday GDP data were published that turned out to be below expectations, indicating a slowdown in economic growth in the United States in the first quarter.

Traders and investors are keeping an eye on a slew of economic developments in the US this week, with the Federal Reserve meeting and the Non-Farm Payrolls report leading the way.

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