NEW YORK — Tech stocks delivered solid gains on Wall Street on Friday after another chip maker reported strong demand related to artificial intelligence.
The strong end of the week for major indexes comes amid lingering fears of persistently high inflation, the risk of US debt default and generally weak corporate earnings.
The S&P 500 rose 54.17 points (1.3%) to close at 4205.45. It posted a modest gain this week and is on a good footing as May draws to a close.
The Dow Jones Industrial Average rose 328.69 points, or 1%, to $33,093.34.
The tech-rich Nasdaq rose 277.59 points, or 2.2%, to record the biggest gain of 12,975.69. The index rose 2.5% for the week as artificial intelligence became a big focus for investors.
Marvell Technology soared a record 32.4% after the chipmaker announced its forecast. AI Revenue in 2024 is expected to be at least double that of the previous year. It follows fellow chip maker Nvidia’s report on Thursday, which gave big predictions for future AI-related revenue.
The innovative field of AI is attracting attention. Critics warn of a potential bubble, but proponents say it could be the latest revolution to reshape the global economy. national financial watchdogs, The Consumer Financial Protection Bureau Follow the law when your company uses AI.
Wall Street continues to focus on Washington, negotiations in progress for transaction To raise the US government debt ceiling and avoid a potential debt crisis disastrous default.
Officials said President Joe Biden and House Speaker Kevin McCarthy are narrowing down a two-year budget deal that could open the door to raising the national debt ceiling.of Democratic president and Republican chairman We hope to find a budget compromise this weekend.
Wall Street and the business community already had a range of concerns before the threat of U.S. debt default was clearly on the list.
“If we avoid that, which seems likely, we’re stuck on a trajectory of slowing growth, still-too-high inflation, and restrictive monetary policy,” said Bill Northay, senior investment director at U.S. Bank Wealth Management. It’s going to go backwards,” he said. .
a An Important Measure of Inflation That amount, which the Fed is watching closely, is higher than economists expected in April.
Sustained inflationary pressure is complicating the Fed’s fight against high prices. The central bank has been raising interest rates aggressively since 2022, but recently signaled at a mid-June meeting that it was likely not to raise rates. The latest government report on inflation has raised concerns about the Fed’s next move.
Wall Street is now leaning slightly towards the possibility of another 1/3-point rate hike in June, according to the CME’s FedWatch tool. The Fed has already raised the base rate ten times in a row.
The Fed faces tough choices at its next meeting, Brian Rose, senior U.S. economist at UBS, said in a report.
“Inflation is too high, but further interest rate hikes could send the economy into recession,” he said.
Bond yields, which had been depressed just before the release of the latest inflation data, have risen since the report. The 10-year Treasury yield, which helps set rates on mortgages and other important loans, rose to 3.80% from 3.78% just before the report was released.
Two-year Treasury yields, which tend to track expectations of Fed action, were more dynamic. It rose to 4.56% from 4.49% before the report.
The latest inflation data also highlighted the continued resilience of consumer spending, which, along with a robust job market, has served as an important bulwark against recession. Economic growth was sluggish at 1.3% in the January-March period, but is expected to pick up to 2% in the current April-June quarter.
The effects of inflation and fears of an impending recession are hurting corporate earnings and outlook. Earnings for the S&P 500 are down about 2% as the latest corporate earnings draw to a close. This follows last quarter’s contraction, and Wall Street expects the quarter to end with further earnings contraction.
Beauty products company Alta Beauty fell 13.4% after a cut in its profit margin forecast. Discount retailer Big Lots fell 13.3% after reporting a much higher-than-expected last-quarter loss.
Investors rewarded several companies for reporting good results. Gap rose 12.4% after strong first-quarter earnings.
Markets are heading into a long weekend, with the US closed on Monday for the Memorial Day holiday. Investors have another busy week ahead of economic updates, including more data on consumer confidence and employment.
Business writers Christopher Lugerber, Elaine Curtainbach and Matt Ott contributed to this report.
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