Nasdaq Index, Dow Jones, S&P 500 News: Big Tech Fuels Market Rally with Stellar Earnings
Tech Giants Lead the Charge
Alphabet’s shares surged nearly 12% after hours as the tech giant not only beat first-quarter earnings expectations but also announced its first-ever dividend alongside a substantial $70 billion buyback program. Microsoft also contributed to the upbeat mood, with shares increasing by 4% post-earnings, as the company surpassed fiscal third-quarter forecasts set by Wall Street analysts.
Market Response to Economic Indicators
Despite the positive moves by tech stocks, the broader market had faced challenges earlier in the week. The Dow Jones experienced a significant drop of 375 points on Thursday, while both the S&P 500 and Nasdaq fell slightly by 0.5% and 0.6% respectively. This downturn was triggered by U.S. economic data indicating a slowdown in GDP growth to 1.6% in the first quarter, below the expected 2.4%. Inflation concerns were heightened by the personal consumption expenditures price index, which rose at a 3.4% pace, intensifying the inflationary outlook.
Sector-Specific Impacts and Forecasts
In the energy sector, mixed earnings reports influenced stock performances. Exxon Mobil’s shares dipped following earnings that fell short of expectations, influenced by declining refining margins and dropping natural gas prices. Conversely, Chevron managed to exceed earnings expectations despite a year-over-year profit decline, facing headwinds in its refineries and international gas operations.
Market Outlook
Looking ahead, traders are adjusting their expectations, with the futures market now pricing in only one potential rate cut this year, anticipated in September. The Federal Reserve, faced with persistent inflation, is likely to adopt a cautious stance, potentially slowing balance sheet reductions before considering rate adjustments. Additionally, upcoming economic reports, particularly the March PCE reading, are expected to show continued inflation pressures, which could influence the Fed’s policy decisions in the coming months.
In summary, while Big Tech’s earnings have provided a temporary uplift to market sentiment, underlying economic challenges and sector-specific headwinds suggest a cautious approach to trading in the near term.