Inflation Concerns and Economic Outlook
Alphabet and Microsoft Propel U.S. Stocks to Best Week Since November
Corporate Earnings Trend
U.S. stocks wrapped up their strongest week since November, bolstered by gains from Alphabet and Microsoft on Friday.
- S&P 500: The index surged 1% to mark its first winning week in the past four.
- Dow Jones Industrial Average: Rose 0.4%.
- Nasdaq Composite: Jumped 2%.
Alphabet's Surge: Alphabet soared 10.2% after surpassing profit expectations for the last quarter. The tech giant announced plans to initiate dividend payouts to investors and authorized a stock buyback program of up to $70 billion, reflecting its robust cash generation.
Microsoft's Momentum: Microsoft climbed 1.8% following robust profit and revenue reports, particularly buoyed by strong growth in its cloud-computing business and emphasis on artificial-intelligence technology.
Intel's Setback: In contrast, Intel experienced a 9.2% decline despite reporting stronger-than-expected profit for the latest quarter. However, its revenue fell short of analysts' estimates, along with a disappointing profit forecast for the current quarter.
Inflation Concerns and Economic Outlook
Stocks faced pressure earlier in the month amid diminished expectations for multiple interest rate cuts by the Federal Reserve due to persistently high inflation. Although Friday's inflation report showed continued elevated levels, financial markets responded more calmly compared to previous reports.
Fed's Policy Outlook
The Federal Reserve is expected to maintain its current interest rate levels at its upcoming policy meeting amid concerns about inflation. The central bank's stance may reflect a cautious approach to ensure inflation gradually declines toward its 2% target.
Corporate Earnings Trend
Earnings reports continue to exceed analysts' forecasts, with approximately 75% of companies topping profit expectations, according to FactSet. Notably, ResMed reported better-than-expected profit and revenue, leading to an 18.9% surge in its stock price.
Global Market Performance
In international markets, Japan's Nikkei 225 rose 0.8% following the Bank of Japan's policy meeting, which concluded without significant changes to interest rates. Indexes across Asia and Europe also recorded gains, signaling positive sentiment across global markets.