The U.S. stock market wrapped up its most impressive week since November on a high note, buoyed by strong performances from tech giants Alphabet and Microsoft.
The Standard & Poor’s 500 index surged 1% in a remarkable turnaround, marking its first week of gains after three consecutive weeks of losses. The Dow Jones industrial average also joined the upward trend, rising by 0.4%, while the Nasdaq composite outperformed with a significant 2% jump.
Alphabet, the parent company of Google, stole the spotlight by soaring an impressive 10.2% following its quarterly earnings report that surpassed analysts’ profit expectations. Investors cheered as the company announced plans to initiate dividends for shareholders and authorized a stock buyback program worth up to $70 billion, indicating robust cash flow generation.
Meanwhile, Microsoft also contributed to the market rally with a solid 1.8% gain after reporting stronger-than-expected profit and revenue figures. The company attributed its success to robust growth in its cloud-computing division, coupled with strategic investments in artificial intelligence technology to enhance customer offerings.
However, the market’s enthusiasm was tempered by a sharp 9.2% decline in Intel’s stock price. Despite posting better-than-expected profit numbers, the semiconductor giant fell short of revenue estimates for the quarter and provided a cautious forecast for the upcoming quarter.
The market sentiment this month has been largely influenced by shifting expectations regarding interest rate cuts by the Federal Reserve. Initial hopes for multiple rate cuts have dwindled, with traders now anticipating only one cut this year in response to persistent reports of inflation exceeding forecasts.
While inflation remains a concern, experts anticipate a gradual cooling-off in the coming months as consumer spending moderates. Despite weaker-than-expected economic readings, the overall outlook for the U.S. economy remains positive, supported by solid consumer demand and resilient buying trends.
Although the Federal Reserve is expected to maintain its current interest rate stance at the upcoming policy meeting, the inability to implement rate cuts may prompt companies to focus on bolstering profits to drive stock price growth.
The ongoing earnings season has been a bright spot, with approximately three-quarters of companies surpassing analysts’ profit forecasts. Notably, ResMed stood out with stronger-than-expected profit and revenue, leading to an 18.9% surge in its stock price, the highest gain in the S&P 500 for the day.
In summary, the S&P 500 closed at 5,099.96, marking a gain of 51.54 points, while the Dow rose by 153.86 points to reach 38,239.66, and the Nasdaq surged by 316.14 points to settle at 15,927.90.
Internationally, positive sentiment extended to global markets, with Japan’s Nikkei 225 index rising by 0.8% following the Bank of Japan’s decision to maintain interest rates unchanged. Similar gains were observed across various markets in Asia and Europe, reflecting broader optimism among investors.
This article, originally published in the Los Angeles Times, was written by an Associated Press contributor, with additional contributions from AP business writer Yuri Kageyama.