NEW YORK (AP): Wall Street concluded its fourth successful week with additional gains on Friday, propelling U.S. stocks to record heights.
The S&P 500 climbed 40.81 points, or 0.8%, to 5,137.08 a day after establishing an all-time high. It’s been on a terrific run and has increased in 16 of the previous 18 weeks because of enthusiasm about decreasing inflation and a generally strong U.S. economy.
The Dow Jones Industrial Average rose 90.99, or 0.2%, to 39,087.38. Technology companies drove the market, as the Nasdaq composite surged 183.02, or 1.1%, to 16,274.94 a day after exceeding its former high set in 2021.
In the bond market, Treasury rates dropped as statistics on manufacturing and morale among U.S. consumers came in worse than experts anticipated. They bolstered predictions that the Federal Reserve may begin decreasing interest rates in June, especially after a report on Thursday showed a key indicator of inflation behaved pretty much as predicted last month.
Dell Technologies helped push the stock market after surging 31.6%. It posted greater earnings and sales for the current quarter than experts predicted, emphasizing demand for its AI-optimized servers.
A seemingly never-ending crescendo of demand for artificial intelligence technology has helped propel equities skyward over the past year. Dell has more than quadrupled in the previous 12 months, while Nvidia has gained more than 260%.
NetApp jumped 18.2% after announcing greater earnings than anticipated, saying it’s experiencing “good momentum in AI.” The data business also presented an anticipated range for earnings in the current quarter that beat what numerous experts were anticipating.
The atmosphere was even more dour in the banking business, as New York Community Bancorp plummeted 25.9%. It cautioned investors late Thursday that it uncovered vulnerabilities in how it internally assesses loans, driven by insufficient supervision, risk assessment, and monitoring procedures.
The corporation stated it wouldn’t be able to complete its annual report in time, and it took a charge totaling $2.4 billion against its performance for the final three months of 2023. Its CEO stepped down after 27 years with the organization, effective immediately.
Much emphasis has been on smaller regional banks after last year’s turmoil in the sector led to the bankruptcies of many. One of them, Signature Bank, was gobbled up by NYCB, which has prompted the resultant bank to face harsher monitoring despite problems with loans connected to real estate.
While NYCB has several concerns that are peculiar to them, the fear has been that banks throughout the sector suffer challenges from loans made for real estate developments.
They’re under pressure in part because the Federal Reserve has boosted its main interest rate to the highest level since 2001, which may compress the financial sector. The anticipation has been that the Fed will drop interest rates many times this year to give some assistance to banks and the wider economy.
The Fed has hinted it may do so if inflation continues to decline significantly toward its 2% objective. But a spate of better data on the economy than anticipated has pushed traders to push back predictions for when the cutbacks may begin. The anticipation now is that the Fed might start in June after markets discarded early expectations for March.
Hopes for a June cut grew after a report revealed the U.S. manufacturing sector fell in February for the 16th consecutive month. Manufacturing has been one of the weakest-performing sections of the economy, but a solid labor market and spending by U.S. consumers have propped it up.
The survey from the Institute for Supply Management also indicated prices paid by manufacturers for raw materials grew again, albeit at a slower rate than in January.
A second survey from the University of Michigan found the mood among U.S. consumers was worse than analysts predicted. It dipped in February from January but kept most of the increases recorded in prior months. That’s essential since spending by U.S. consumers makes up the majority of the economy.
In the bond market, Treasury rates plummeted after the news. The yield on the 10-year Treasury declined to 4.18% from 4.25% late Thursday and from 4.28% immediately before the data’s publication.
The two-year Treasury yield, which more closely matches expectations for the Fed, dipped to 4.53% from 4.62%.
Economists at Deutsche Bank anticipate the Fed to drop its main interest rate by 1 percentage point this year, down from its current range of 5.25% to 5.50%. Like many traders, they too anticipate the Fed to start in June.
But top U.S. economist Matthew Luzzetti also believes there are other reasons to be cautious about reductions. One is that stock prices have already soared and Treasury rates have already dipped in anticipation of impending cuts, which loosens conditions for the economy and potentially increases upward inflation pressure.
In stock markets overseas, Japan’s Nikkei 225 surged 1.9%. Indexes increased slightly throughout the remainder of Asia and Europe.
NEWS SOURCE: THE ASSOCIATED PRESS
