Wall Street climbs on Big Tech enthusiasm
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Traders work the floor of the New York Stock Exchange, in New York City.
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NEW YORK - US stocks rose on Tuesday on investors’ renewed enthusiasm for expected earnings reports from megacap technology companies Alphabet and Microsoft amid signs of economic resilience.
A survey showed consumer confidence increased to a two-year high in July, amid continued optimism about the labour market despite worries about a recession.
US tech giants are expected to signal an end to a nearly year-long slowdown in their cloud businesses as technology spending and digital ads are likely to pick up.
Results from Alphabet and Microsoft are due after the bell. Shares in the owner of Google and the maker of Windows climbed 0.99 per cent and 1.45 per cent, respectively.
Investor fascination with artificial intelligence is a positive influence for megacap tech firms, said Mr Steve Sosnick, chief strategist at Interactive Brokers. “When you have this much enthusiasm for a specific investing theme, you don’t need much of a reason for markets to move. It’s inertia.”
With the US central bank on track for another 25-basis point interest rate hike on Wednesday, policymakers face a choice over how much weight to put on recent economic data.
The tech-heavy Nasdaq Composite index has rallied nearly 35.2 per cent in 2023, helped by outsized gains in rate-sensitive megacap growth companies on optimism over artificial intelligence and hopes of an end to the US Federal Reserve’s tightening cycle.
“Tech sold off horribly in 2022, so it’s no surprise that it has come back so strong because investors believe the Fed is either done or close to being done with its tightening cycle and that’s all the market wants,” said Mr M. Jake Dollarhide, chief executive at Longbow Asset Management.
Companies outside tech are also performing well as lower valuations attract investors.
After logging its longest winning streak in over six years on Monday, the blue-chip Dow inched up even as a 0.99 per cent slide in Boeing capped gains.
RTX tumbled 12.24 per cent after saying many of its Pratt & Whitney GTF engines that power Airbus A320neo jets will need “accelerated removals and inspections”.
The S&P Composite 1500 Passenger Airline sub index dropped 3.45 per cent, bogged down by a 9.64 per cent fall in Alaska Air after the airline’s annual revenue growth outlook missed expectations.
The Dow Jones Industrial Average rose 78.93 points, or 0.22 per cent, to 35,490.17, the S&P 500 gained 18.03 points, or 0.4 per cent, to 4,572.67 and the Nasdaq Composite added 111.07 points, or 0.79 per cent, to 14,169.94.
Most of the 11 major S&P 500 sectors were subdued. But materials stocks gained 1.93 per cent tracking rising metal prices as investors cheered pledges of support from a politburo meeting in China.
General Electric jumped 6 per cent after raising its annual adjusted profit forecast, while General Motors slumped 4.24 per cent after it posted a decline in adjusted pre-tax profit and margins in its key North American market from the previous quarter.
3M rose 5.29 per cent as the industrial conglomerate raised its annual adjusted profit forecast.
The S&P 500 earnings are now expected to decline 7.7 per cent for the second quarter, as per Refinitiv data.
Advancing issues outnumbered declining ones on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.12-to-1 ratio favoured advancers.
The S&P 500 posted 31 new 52-week highs and no new lows; the Nasdaq Composite recorded 63 new highs and 72 new lows. REUTERS
