NEW YORK (AP) — The best week for U.S. stocks since November ended higher thanks to: alphabet and microsoft on friday.
The S&P 500 rose 1%, capping off its first winning week in the past four days. The Dow Jones Industrial Average rose 153 points, or 0.4%, and the Nasdaq Composite Index rose 2%.
Alphabet’s profit soared 10.2% last quarter, beating analysts’ expectations by a wide margin. Google’s parent company also announced it would start paying dividends to investors and authorized a stock buyback program of up to $70 billion, a sign of how much cash Google is generating.
Meanwhile, Microsoft rose 1.8% after reporting better-than-expected profits and revenue. The company cited significant growth in its cloud computing business, which promotes artificial intelligence technology to customers.
This helped offset Intel’s 9.2% decline. The company reported higher-than-expected profits in its latest quarter, but sales fell short of analysts’ expectations. The same was true for this quarter’s profit forecast.
Stocks have been under pressure across the board this month as hopes for multiple interest rate cuts by the Federal Reserve this year have waned.a series of report will be shown this year inflation Still lower than expected, traders are expecting perhaps one rate cut this year, which has been revised lower than expected. 6 or more At the beginning of the year.
Yet another report Friday showed that inflation remains high. This time, the Fed’s favorite measure of prices in March was not as bad as expected. Financial markets fared much better than before. previous day’s report This suggests that the same measure of inflation rose rapidly from January to March.
U.S. Treasury yields fell sharply in the bond market following Friday morning’s news. The yield on the 10-year U.S. Treasury note fell to 4.66% from 4.71% late Thursday. Two-year Treasury yields, which are more closely tied to Fed expectations, stabilized. It decreased slightly from 5.00% to 4.99%.
Inflation remains higher than expected, but EY chief economist Gregory Daco said shoppers are under pressure from slowing wage growth to curb purchases that drive inflation. We expect inflation to subside in the coming months.
“Consumers are still willing to spend, but not on anything and at any price,” he said.
Economists also said Thursday’s weaker-than-expected readings on the broader U.S. economy contributed to the decline in stocks, but that it may not be as bad as it seems on the surface.
“The economy remains strong,” Bank of America economists said in a note, pointing to strong purchasing trends among U.S. customers. Such an interpretation allays concerns that the U.S. economy is heading toward a toxic combination of sluggish growth and high inflation, but the Federal Reserve has no good tools to correct it. .
Still, the Fed is likely to hold off on its next policy meeting on Wednesday, given the better-than-expected inflation numbers. Key interest rates have been kept at their highest levels since 2001 in hopes of curbing inflation by putting downward pressure on the economy and financial markets.
After previously suggesting three rate cuts could be planned this year, Fed officials later said: It is possible to maintain the main interest rate Inflation will remain high for some time to ensure that it remains on track for its 2% target.
Friday’s report on sticky inflation “confirms Vanguard’s belief that the Federal Reserve may decide it cannot cut rates this year,” said Roger Arriaga, global head of portfolio construction at the investment giant. Diaz said.
If interest rates remain high, companies will need to generate stronger profits to drive up stock prices. So far this reporting season, the trend has been better than expected.
Roughly three out of four companies beat analyst estimates, according to FactSet. That includes ResMed, which reported healthier-than-expected profits and revenue late Thursday. The company’s stock rose 18.9%, the biggest gain in the S&P 500 on Friday.
Overall, the S&P 500 rose 51.54 points to 5,099.96. The Dow rose 153.86 points to 38,239.66 and the Nasdaq rose 316.14 points to 15,927.90.
In overseas stock markets, Japan’s Nikkei Stock Average rose 0.8% after the Bank of Japan concluded its policy meeting without making any major changes to interest rates. The rest of Asia and much of Europe also saw gains.
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AP Business Writer Yuri Kageyama contributed.