Market Momentum Builds as Tech Giants Report Strong Earnings
The US stock market is experiencing a surge in momentum, driven by a wave of positive profit reports from influential companies. As of early trading, the S&P 500 has risen 0.6%, while the Dow Jones Industrial Average has climbed 127 points, or 0.3%. The Nasdaq composite has also seen a 0.7% increase.
Meta Platforms Leads the Charge
Meta Platforms, the company behind Facebook and Instagram, has played a significant role in lifting indexes, with a 4.4% rally following its better-than-expected profit report for the end of 2024. The company’s emphasis on artificial-intelligence efforts has calmed market worries sparked by Chinese upstart DeepSeek’s claims of developing a large language model capable of competing with the world’s best without relying on top-flight chips.
AI Boom Drives Market Growth
The artificial-intelligence boom has been a key driver of the US stock market’s repeated records in recent years. However, concerns about the need for AI chips, data centers, and electricity have sent shockwaves through markets. Nvidia, a company heavily invested in AI, has seen its stock slip 0.4% in response.
Tesla Defies Expectations
Tesla has bucked the trend, rising 1.6% despite reporting a weaker profit for the latest quarter than analysts expected. Elon Musk’s announcement that the company is on track to offer unsupervised “full self-driving” technology to customers as a paid service starting in June has boosted investor confidence.
Microsoft’s Cloud Computing Concerns
Microsoft, on the other hand, has fallen 4.7% despite topping analysts’ expectations for profit in the latest quarter. The focus has shifted to the slower-than-expected growth in its cloud computing business, a crucial aspect of its AI efforts. Microsoft CEO Satya Nadella remains optimistic about AI, citing the benefits of efficiency gains and lower prices in AI development.
Pressure to Deliver Strong Profits
Companies are under pressure to deliver stronger profits to offset the downward force on stock prices caused by climbing yields in the bond market. As bonds offer higher interest rates, investors are becoming increasingly hesitant to pay high prices for stocks.
Treasury Yields and the Economy
Treasury yields have been climbing amid fears of stubbornly high inflation, which has been fueled by a solid US economy and concerns about tariffs and other policies potentially coming from President Donald Trump. However, yields edged lower on Thursday following a report indicating slower-than-expected US economic growth at the end of 2024.
Global Market Trends
In global markets, indexes have risen across much of Europe, following Japan’s Nikkei 225’s 0.3% increase. Several Asian markets remain closed for the Lunar New Year holiday.
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