Alphabet and Microsoft push Wall Street toward its first winning week in a month
Business
Alphabet and Microsoft push Wall Street toward its first winning week in a month
NEW YORK (AP) — Alphabet and Microsoft are leading the U.S. stock market on Friday toward the finish of its first winning week in the last four.
The S&P 500 was 0.7% higher in early trading. The Dow Jones Industrial Average was up 76 points, or 0.2%, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 1.4% higher.
Alphabet jumped 11% after breezing past analysts’ expectations for profit last quarter. The parent company of Google also said it will start paying a dividend to investors, a signal that it’s generating even more cash than it wants to spend on investments.
Microsoft, meanwhile, climbed 1.7% after also reporting stronger profit and revenue than expected. It cited strong growth in its cloud-computing business as it pushes artificial-intelligence technology to its customers.
They helped offset a 12.5% drop for Intel. It reported stronger profit for the latest quarter than expected, but its revenue fell short of analysts’ estimates. So did its forecast for profit in the current quarter.
Stocks have broadly been under pressure this month as hopes wither for multiple cuts to interest rates this year by the Federal Reserve. A series of reports this year showing inflation remaining worse than forecast has traders expecting maybe one cut to rates this year, down from six or more at the start of the year.
Treasury yields eased in the bond market following the inflation report. The yield on the 10-year Treasury fell to 4.66% from 471% late Thursday.
While inflation has remained hotter than forecast, EY Chief Economist Gregory Daco expects it to cool in coming months as shoppers pressed by slowing wage growth tamp down their purchases, which is the fuel that gives inflation energy.
“Consumers remain willing to spend, but not on anything, nor at any price,” he said.
Economists also said the weaker-than-expected reading on the overall U.S. economy from Thursday, which helped send stocks sliding, may not be as bad as it seemed on the surface.
“The economy remains on solid footing,” Bank of America economists said in a report, pointing to solid buying trends from U.S. customers. Such a reading helps calm worries that the U.S. economy could be heading for a toxic mix of stagnating growth and high inflation, something that the Federal Reserve doesn’t have great tools to fix.
The higher-than-expected inflation reading from Thursday, though, will likely keep the Fed in a “wait-and see approach to cuts while giving policy more time to work” at its next meeting on Wednesday, they wrote in a BofA Global Research report.
The Fed has been keeping its main interest rate at the highest level since 2001 in hopes of undercutting inflation by putting downward pressure on the economy and financial markets. Inflation has come down from its peak, and progress last year had the Federal Reserve recently indicating it could cut rates three times this year. But the recent stalling in progress pushed top Fed officials to since say they could hold its main interest rate high for a while.
In stock markets abroad, Japan’s Nikkei 225 rose 0.8% after the Bank of Japan ended a policy meeting with no major changes. Indexes were higher across much of the rest of Asia and Europe.
