Wall Street climbs on Big Tech enthusiasm

Wall Street climbs on Big Tech enthusiasm

U.S. stocks experienced a rise on Tuesday due to investors’ renewed enthusiasm for expected earnings reports from megacap technology companies Alphabet (GOOGL.O) and Microsoft (MSFT.O), indicating signs of economic resilience.

According to a survey, consumer confidence reached a two-year high in July, reflecting continued optimism about the labor market despite concerns about a recession.

Tech giants in the U.S. are expected to indicate the end of a nearly year-long slowdown in their cloud businesses as technology spending and digital ads are likely to increase.

Results from Alphabet (GOOGL.O) and Microsoft (MSFT.O) are scheduled to be released after the bell, with shares in both companies rising 0.99% and 1.45%, respectively.

Steve Sosnick, chief strategist at Interactive Brokers, stated that investor fascination with artificial intelligence is positively influencing megacap tech firms. He added that when there is so much enthusiasm for a specific investing theme, markets can move based on inertia alone.

With the U.S. central bank expected to raise interest rates by 25 basis points on Wednesday, policymakers are faced with a decision on how much weight to give recent economic data.

The tech-heavy Nasdaq Composite index (.IXIC) has rallied nearly 35.2% this year, driven by significant gains in rate-sensitive megacap growth companies. This is due to optimism over artificial intelligence and hopes of the U.S. Federal Reserve’s tightening cycle coming to an end.

M. Jake Dollarhide, CEO at Longbow Asset Management, explained that tech stocks performed poorly in 2022, so it is not surprising that they have rebounded strongly. He believes that investors believe the Fed is either finished or close to finishing its tightening cycle, which is what the market wants.

Companies outside of the tech sector are also performing well, as lower valuations are attracting investors.

Despite a 0.99% slide in Boeing (BA.N), the blue-chip Dow inched up after logging its longest winning streak in over six years on Monday.

RTX (RTX.N) experienced a 12.24% decline after announcing that many of its Pratt & Whitney GTF engines powering Airbus A320neo jets will require accelerated removals and inspections.

The S&P composite 1500 passenger airlines sub index (.SPCOMAIR) dropped 3.45%, primarily due to a 9.64% fall in Alaska Air (ALK.N) after the airline’s annual revenue growth outlook fell short of expectations.

The Dow Jones Industrial Average (.DJI) rose 78.93 points, or 0.22%, to 35,490.17, the S&P 500 (.SPX) gained 18.03 points, or 0.40%, to 4,572.67, and the Nasdaq Composite (.IXIC) added 111.07 points, or 0.79%, to 14,169.94.

Most of the 11 major S&P 500 sectors remained subdued, but materials stocks (.SPLRCM) gained 1.93% as metal prices rose. This was due to investors cheering pledges of support from a politburo meeting in China.

General Electric (GE.N) saw a 6% jump after raising its annual adjusted profit forecast, while General Motors (GM.N) experienced a 4.24% decline in adjusted pre-tax profit and margins in its key North American market.

3M Co (MMM.N) rose 5.29% as the industrial conglomerate raised its annual adjusted profit forecast.

According to Refinitiv data, the S&P 500 earnings are now expected to decline 7.7% for the second quarter.

Advancing issues outnumbered declining ones on the NYSE, with a ratio of 1.38-to-1, and on Nasdaq, a ratio of 1.12-to-1 favored advancers.

The S&P 500 posted 31 new 52-week highs and no new lows, while the Nasdaq Composite recorded 63 new highs and 72 new lows.

Carolina Mandl in Sao Paulo, Bansari Mayur Kamdar, and Johann M Cherian in Bengaluru contributed to this report. The article was edited by Shinjini Ganguli, Shounak Dasgupta, and Cynthia Osterman.

Bansari, an economist and winner of the Arthur MacEwan Award for Excellence in Political Economy, reports on the global financial markets and writes RushHourDaily’ daily flagship market reports on equities, bonds, and currencies. She has written for renowned global papers and magazines such as The Diplomat, Boston Globe, Conversation, Huffington Post, and more.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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