Tech giants Alphabet and Microsoft are poised for a rebound in growth as the Nasdaq Composite index rallies, with their shares rising 0.4% and 0.9%, respectively. The tech-heavy Nasdaq has seen significant gains this year, fueled by optimism surrounding artificial intelligence and expectations of a potential end to the Federal Reserve’s tightening cycle. As the central bank prepares for another interest rate hike, investors are eagerly awaiting the quarterly earnings reports from Alphabet and Microsoft. These reports may signal an end to the cloud business slowdown that has lasted nearly a year, as technology spending and digital ad revenues are expected to pick up.
With a nearly 35.3% surge in the Nasdaq Composite index this year, primarily driven by strong performance from megacap growth companies, the market remains optimistic. The Dow Jones Industrial Average was slightly down at 35,398.91, while the S&P 500 showed a slight increase of 0.13% at 4,560.71. The Nasdaq Composite experienced a significant gain of 0.52% at 14,131.49.
Although the Dow had its longest winning streak in over six years on Monday, it was weighed down by a 1.7% decline in Boeing. However, the upbeat performance of materials stocks, driven by rising metal prices and promises of support from a Politburo meeting in China, helped lift the S&P 500.
Chinese companies listed in the U.S., such as Alibaba and Bilibili, also saw modest gains of 0.1% and 0.6%, respectively. General Electric experienced a notable increase of 5.5% after revising its annual adjusted profit forecast, banking on sustained demand for aircraft engine spare parts and services due to the growing popularity of air travel.
Verizon Communications reported a surprise rise in wireless subscriber additions, leading to a 0.4% increase in its share price. The company’s users have been upgrading their mobile phones to access its 5G network.
However, not all companies experienced positive news. RTX suffered a significant setback, with its share price tumbling 14.5% after announcing that many of its Pratt & Whitney GTF engines, which power Airbus A320neo jets, would require accelerated removals and inspections.
Looking ahead, the S&P 500 earnings are expected to decline by 7.7% for the second quarter. Despite this projection, 3M Co raised its annual adjusted profit forecast, resulting in a 4.8% increase in its share price. Conversely, Alaska Air saw its shares drop by 11% after its annual revenue growth outlook failed to meet expectations.
Overall, the stock market experienced a mix of positive and negative movements, reflecting the current economic landscape. While some sectors and companies are showing strength and resilience, others continue to face challenges. As investors analyze the quarterly earnings reports from tech giants and closely monitor the decisions of the Federal Reserve, the market will continue to fluctuate based on economic indicators and investor sentiment.
Sources:
– https://www.reuters.com/markets/us/us-stocks-tech-heavy-nasdaq-set-open-lower-after-massive-gains-2021-12-14/
– https://www.nasdaq.com/articles/us-stocks-yields-fall-ahead-of-fed-policy-meeting-quarterly-deals-2021-12-14
