Wall Street - 'When the Going Gets Tough, the Tough Get Going'
Wall Street wrapped up its strongest week for U.S. stocks since November, with Friday seeing further gains driven by the stellar performance of the "Magnificent Seven" artificial intelligence giants Alphabet and Microsoft.
Both companies reported earnings and revenue that surpassed expectations, contributing to the market's positive momentum.
Alphabet surged by +10.2% after Google's parent company surpassed profit forecasts last quarter, pushing its market value above $2 trillion.
Additionally, Alphabet announced plans to initiate dividend payments to investors and authorized a stock buyback program of up to $70 billion, showcasing its substantial cash-generation capabilities.
Meanwhile, Microsoft shares rose +2% following its third-quarter report, which showed a +17% increase in revenues year-on-year and a +20% surge in net income, indicating accelerated growth in cloud services.
The rest of the 'Mag 7' also showed strong performance, with Amazon.com rising by +3.43%, Nvidia gaining +6.18%, and Meta Platforms edging higher by +0.43% despite the previous day's sell-off triggered by disappointing results.
On the other hand, Apple saw a slight decline of -0.35%, while Tesla closed down by -1.1%.
Intel shares fell over -9% despite surpassing first-quarter earnings forecasts due to missed sales targets and disappointing guidance for the current quarter.
Chevron beat earnings estimates, but lower refining margins and natural gas prices led to a profit decline.
Exxon Mobil lost nearly -3% as its first-quarter profit fell short of expectations, dropping -28% from a year ago.
Snap surged nearly +28% after beating first-quarter revenue and user growth estimates, while Pinterest shares finished up +4%.
The busy earnings season continues next week, headlined by results from technology giants Apple and Amazon.
At the New York Stock Exchange (NYSE) close, the Dow Jones Industrial Average climbed +153.86 points, or +0.40%, reaching 38,239.66.
Both the S&P 500 and the Nasdaq marked their most substantial weekly percentage gains since early November 2023.
The broad-based S&P 500 Index surged +51.54 points, or +1.02%, to 5,099.96, while the tech-heavy Nasdaq Composite Index rose by +316.14 points, or +2.03%, closing at 15,927.90.
Among the major S&P 500 sectors, six finished in positive territory, led by gains in communication services, technology, consumer discretionary, and materials.
Meanwhile, U.S. monthly inflation rose moderately on an annual basis in March, aligning with expectations.
However, the U.S. Federal Reserve's preferred inflation metric, the personal consumption expenditures (PCE), surpassed forecasts last month and remains well above the Fed's 2% target, reaching 2.7% in the year to March.
This suggests persistent high price pressures, complicating the Fed's plan to cut interest rates this year.
The inflation increase was mainly driven by a surge in petrol costs, attributed to heightened tensions in the Middle East pushing up oil prices.
The core personal consumption expenditures (PCE) index, excluding volatile food and fuel prices, remained at 2.8%, surpassing expectations of a decrease to 2.7%, reflecting year-over-year changes in actual spending, excluding volatile energy and food prices.
Headline (PCE), which includes all spending, increased by 0.3% from February to March, aligning with estimates of 0.3%.
Friday's data didn't significantly impact confidence, but it didn't provide much of a boost either, as money markets are now pricing in a higher likelihood of a Federal Reserve rate cut in September.
The Fed's next rate decision is expected on Wednesday, and it's widely anticipated that it will keep rates steady in the range of 5.25% to 5.50%.
Fed Chair Jerome Powell has emphasized the need for more confidence in inflation, reaching the 2% goal before considering rate cuts.
Therefore, the statement following the rate announcement is expected to maintain the stance of no urgency for cuts.
In the U.S. government bond markets, the yield on the 10-year Treasury, which influences rates for mortgages and other economy-dictating loans, reached its highest level this year, nearing the November 2023 closing level of 4.66%. Additionally, the policy-sensitive two-year yield, reflecting market expectations of future Fed moves, closed at 5.00%.
Meanwhile, the launch of Runes has sparked significant discussion within the crypto community, fueling a surge in interest and utility for cryptocurrencies.
This heightened activity has driven Bitcoin's transaction volume to reach a new all-time high, signalling a notable increase in the adoption and usage of digital assets.
Since its launch after the April 20 halving, Runes, a new token standard on the Bitcoin blockchain, has accounted for over two-thirds of all Bitcoin transactions, processing more than 2.38 million transactions.
According to news sources, following the launch of Runes, the number of Bitcoin transactions has increased rapidly.
At the New York close, Bitcoin, the largest cryptocurrency, was trading at around US$63,766.00, fluctuating within an intraday range of US$63,354.00 to US$64,771.00.
Despite Bitcoin's holding in a tight range bound since falling away from its peak at US$72,000.00, support is estimated between US$56,000.00 and US$58,000.00, while resistance is seen between US$78,000.00 and US$81,000.00.
Given the high volatility, closely monitoring price action and adapting trading strategies to market fluctuations is essential.
Meanwhile, Ethereum, the second-largest blockchain in terms of cryptocurrency market capitalization, traded within a daily range of US$3,104.00 to US$3,165.00 before closing at US$3,130.00.
Precious metal prices remain volatile. The spot gold market closed at $2,338 per ounce, while silver closed at $27.20.
In the energy markets, Brent crude's global benchmark rose to $89.46, while the U.S. benchmark, West Texas Intermediate, settled at $83.30.
The U.S. Dollar Index (U.S. DXY), which measures the dollar's performance against six major foreign currencies in the forex market, reached a 5-month high at 106.10.
Meanwhile, the Eurodollar was 1.0692, and the British pound finished at 1.2492. The Japanese yen ended at 158.42, while the Australian dollar was at 0.6532.
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