Tech Stocks Drive Recovery

Wall Street’s rally regained momentum on Friday, driven by positive profit reports and signs that inflation is easing its grip on the economy. The technology sector led the charge, propelling the S&P 500 to its third consecutive week of gains and its ninth out of the last 11 weeks.

• The S&P 500 rose by 44.82 points, or 1%, to reach 4,582.23.
• The Dow climbed 176.57 points, or 0.5%, to close at 35,459.29.
• The Nasdaq surged 266.55 points, or 1.9%, reaching 14,316.66.

Recent stock market gains are fueled by hopes that high inflation is cooling down, potentially leading the Federal Reserve to pause interest rate hikes. This could support sustained economic growth, avoiding a long-awaited recession. A report released on Friday further increased investor optimism, revealing a slightly larger-than-expected slowdown in the Fed’s preferred inflation measure. Additionally, data indicated that worker compensation during the spring grew less than anticipated. While this may disappoint workers seeking higher wages, investors view it as a factor alleviating upward inflationary pressure.

Traders are hopeful that the slowdown in inflation will prompt the Federal Reserve to conclude its current interest rate hike cycle with the recent increase. This optimism has driven technology stocks and other sectors that benefit from lower rates to rally, exerting the strongest influence on the upward movement of the S&P 500. Microsoft, Apple, and Amazon saw gains of at least 1.4%, positioning them as the top contributors to the market’s rise. Furthermore, companies have been exceeding profit expectations for the spring season, according to FactSet. Intel, for instance, experienced a 6.6% increase in stock price after reporting a profit when analysts had predicted a loss.

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