Tech giants drive stock market rebound as earnings season kicks off
The world’s largest technology companies led a rebound in stocks on Thursday, with traders gearing up for a wave of corporate earnings reports that will test this year’s $4 trillion rally.
Earnings season kicked into full swing on Friday, with JPMorgan Chase & Co., Wells Fargo & Co., and Citigroup Inc. reporting their numbers. A solid economy is expected to fuel a rise in profit growth for S&P 500 companies, with strong margins from big tech expected to be a key driver.
George Ball, chairman of Sanders Morris, noted, “It’s not going to be Fed rate cuts that drive the market going forward, rather it’s going to be earnings. Corporate earnings are much stronger than people have anticipated even in this elevated interest-rate environment.”
The S&P 500 hovered near 5,200, while the Nasdaq 100 added over 1.5%. Tech giants like Alphabet Inc., Amazon.com Inc., and Apple Inc. saw gains, with Apple jumping on news of plans to overhaul its Mac line. However, financial shares came under pressure, with Morgan Stanley tumbling on news of regulatory probes.
Treasury 10-year yields rose, and a lackluster demand for 30-year bonds was noted. The euro dropped after the European Central Bank signaled potential rate cuts due to cooling inflation.
Wall Street projects S&P 500 members will show 3.8% annual growth in earnings per share for the first-quarter reporting period. The “Magnificent Seven” cohort, including Apple Inc., Microsoft Corp., and Amazon.com Inc., are on course to see a 38% rise in profits in the first quarter.
Mark Hackett at Nationwide stated, “The next challenge is earnings season, with the reaction to news likely to pave the path forward for equities.”
Investors will be closely watching bank earnings and key profit drivers like net interest income and investment banking. The outlook from banks and commentary around these factors will be crucial for market sentiment.
Overall, the market’s returns are broadening out beyond just a handful of tech stocks, signaling potential for a more diverse market performance in the coming months.
