FX.co ★ U.S. Stocks Rally On Upbeat Tech Earnings

On Friday, stocks experienced a significant increase, largely counteracting Thursday's weakness. The majority of the averages moved upwards, with the Nasdaq taking the lead.

Despite pulling back from their peak levels later in the day, the majority of averages remained solidly in the green. The Nasdaq surged by 2.0 percent, gaining 316.14 points to reach 15,927.90. The S&P 500 increased by 1.0 percent, adding 51.54 points to reach 5,099.96. The Dow Jones rose by 0.4 percent, climbing 153.86 points to settle at 38,239.66.

Over the week, the Nasdaq experienced a 4.2 percent leap, the S&P 500 rose by 2.7 percent, and the Dow Jones went up 0.7 percent.

This rally was largely driven by a positive response to the recent earnings reports from highly recognized tech companies. Alphabet's shares soared by 10.2 percent after the Google parent's Q1 results exceeded expectations. They authorized their first-ever dividend and a $70 billion stock buyback.

Moreover, Microsoft saw its shares rise by 1.8 percent after its Q3 results surpassed expectations. Snap shares shot up by 27.6 percent following Q1 results that outstripped both top and bottom-line expectations.

However, Intel shares dropped by 9.2 percent after its Q1 earnings had surpassed estimates but offered disappointing future guidance.

Traders also reacted strongly to the inflation data released by the Commerce Department. This showed consumer prices in the U.S. escalating as predicted in March.

Consumer price index rose by 0.3 percent in March, matching the February increase, and in line with economist predictions. Excluding food and energy prices, core consumer prices also increased by 0.3 percent for the second consecutive month, again aligning with expectations.

The report revealed that the yearly consumer price growth rate accelerated to 2.7 percent in March, a rise from 2.5 percent in February. Economists predicted the growth rate to increase to 2.6 percent, whereas the core consumer prices in March maintained the same growth rate as February at 2.8 percent, defying economists' expectations of a slowdown to 2.6 percent.

These inflation readings, favored by the Federal Reserve, were included in the Commerce Department's report on personal income and expenditure in March.

Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance, suggested the market will need to adjust to hopes for Fed rate cuts due to the elevated levels of inflation, considering it the new normal for 2024. He added optimism is high for the market as it is believed that rate cuts are unnecessary for the bull rally to continue. He anticipated continued economic expansion and corporate profits growth as the major drivers of new stock highs.

Semiconductor stocks showed significant strength despite Intel's slump, with the Philadelphia Semiconductor Index rising by 2.6 percent. Software stocks also gained substantial ground, prompting a 1.5 percent gain for the Dow Jones Software Index, courtesy of Microsoft's positive results.

In international trading, Friday saw most of the Asia-Pacific stock markets rise, with Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index climbing by 0.8 percent and 2.1 percent respectively. European markets also trended upward; Germany’s DAX Index jumped by 1.4 percent, the French CAC 40 Index, and the UK's FTSE 100 Index both grew by nearly 1 percent.

In the bond market, treasuries recouped ground after a significant downturn over the previous two sessions. The yield on the benchmark ten-year note fell by 3.7 basis points, dropping to 4.669 percent.

Looking forward, while the Federal Reserve's monetary policy announcement will likely be the focus next week, traders will also closely monitor the monthly jobs report and keep an eye on reports about manufacturing and service sector activities alongside a substantial inflow of corporate earnings news.