Stock Market Today: Technology Leads More Gains on Wall Street
NEW YORK (AP) Stocks rose in afternoon trading on Wall Street on Friday, driven by more gains in tech stocks as another chipmaker reported strong intelligence-related demand artificial.
The S&P 500 rose 1.3% and is on track to end the week with a slight gain. The Dow Jones Industrial Average rose 308 points, or 0.9%, to 33,072 at 1:13 p.m. EST, and the Nasdaq rose 2.2%.
Tech stocks did the heavy lifting for the benchmark S&P 500. Marvell Technology jumped 28% after the chipmaker said it expected AI turnover for the 2024 financial year to at least double compared to the previous year. This follows Thursday’s report from fellow chipmaker Nvidia, which gave a big forecast for upcoming AI-related sales.
The revolutionary field of AI has become a hot topic. Critics warn it’s a potential bubble, but proponents say it could be the last revolution to reshape the global economy.
Wall Street remains focused on Washington and ongoing negotiations for an agreement to lift the US government debt ceiling and avoid a potentially calamitous default.
Officials said President Joe Biden and House Speaker Kevin McCarthy are closing in on a two-year budget deal that could open the door to lifting the nations debt ceiling. The Democratic President and the Republican President hopes to find a budgetary compromise this weekend.
Wall Street and the wider economy already had a full list of concerns before the threat of a US default on its debt was clearly highlighted on the list.
If we avoid that, and it seems like a high probability, we’ll be back on a path of economic slowdown, still-too-high inflation and tight monetary policy, said Bill Northey, chief investment officer at US Bank Wealth Management. .
A key measure of inflation which is closely watched by the Federal Reserve beat economists’ expectations in April.
Persistent inflationary pressure is complicating the Fed’s fight against rising prices. The central bank has been raising interest rates aggressively since 2022, but recently signaled it would likely forgo a rate hike at its meeting in mid-June. The government’s latest inflation report raises concerns about the Fed’s next move.
Wall Street is now leaning slightly toward the potential for another quarter-point rate hike in June, according to the CME’s Fedwatch tool. The Fed has already raised its benchmark interest rate 10 times in a row.
The Fed faces a tough choice at its next meeting, wrote Brian Rose, senior US economist at UBS, in a report.
Inflation is too high, but further rate hikes could push the economy into recession, he said.
Bond yields had fallen just before the latest inflation data, but rose after the report. The yield on the 10-year Treasury, which helps set rates for mortgages and other large loans, fell from 3.78% to 3.81% just before the report was released.
Movement in the two-year Treasury yield, which tends to track expectations for Fed action, was stronger. It jumped to 4.56% from 4.49% before the report.
The latest inflation data also highlighted the continued resilience of consumer spending, which has been a key bulwark, along with the strength of the job market, against a recession. The economy grew at a slow 1.3% annual rate from January to March and is expected to accelerate to a 2% pace in the current April-June quarter.
The impact of inflation and fears of a looming recession weighed on corporate earnings and forecasts. The latest round of corporate earnings is coming to an end, with S&P 500 corporate earnings contracting about 2%. This follows a previous quarterly contraction and Wall Street expects the current quarter to end with lower earnings.
Beauty products company Ulta Beauty fell 12.8% after revising its profit margin forecast. Discount retailer Big Lots fell 14% after reporting a much bigger loss last quarter than analysts had expected.
Investors rewarded several companies that published strong financial results. Gap rose 13.1% after posting a strong first-quarter profit.
Markets in Europe and Asia gained ground.
Markets are heading into a long weekend and will be closed in the United States for the Memorial Day holiday on Monday. Investors have another busy week of economic updates ahead, including more information on consumer confidence and employment.
Business writers Christopher Rugaber, Elaine Kurtenbach, and Matt Ott contributed to this report.
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