NEW YORK, April 27 ― US stocks closed higher yesterday, buoyed by a rally in megacap growth stocks following robust quarterly results from technology heavyweights Alphabet and Microsoft in addition to moderate inflation data.
Investors cheered Alphabet's first-ever dividend, its US$70 billion (RM333.7 billion) stock buyback programme, and better-than-expected first-quarter results. Its shares jumped 10 per cent and reached a record high, lifting the Google-parent's market value above US$2 trillion.
Microsoft shares rose 1.8 per cent after its third-quarter revenue and profit exceeded Wall Street estimates, driven by gains from artificial intelligence (AI) adoption across its cloud services.
Other megacap growth stocks also closed higher: Amazon.com rose 3.4 per cent, Nvidia gained 5.8 per cent, and Meta Platforms added 0.4 per cent. However, Apple fell 0.3 per cent and Tesla closed down 1.1 per cent. On Wednesday, Meta results had disappointed investors even as the company ratcheted up spending on AI.
Six out of the 11 major S&P 500 sectors finished higher, led by gains in communication services, technology, consumer discretionary and materials.
The S&P 500 and the Nasdaq registered their biggest weekly percentage gains since early November 2023. Benchmark S&P 500 snapped three weeks of losses, while the Nasdaq ended four straight weeks of declines.
“The earnings reports of Microsoft and Google allayed a lot of the concerns about the fact that the spending on data centers and AI, which Meta had raised a day before, was going to compress margins,” said Tom Plumb, president and lead portfolio manager at Plumb Funds in Madison, Wisconsin.
“Both Google and Microsoft had indicated that with their current capital plans, they still expected their margins to expand. That allayed a lot of the fears that people had about the growth of data computing,” Plumb added.
US Commerce Department data showed monthly inflation rose moderately in March on an annual basis while coming in line with estimates on a monthly basis.
The report offered some relief to financial markets spooked by worries of stagflation a day after data showed inflation surging and economic growth slowing in the first quarter.
After the data, money markets priced in a firmer chance of a Federal Reserve rate cut in September. The yield on the benchmark 10-year Treasury note fell after the data, last standing at 4.6630 per cent.
The Dow Jones Industrial Average rose 153.86 points, or 0.40 per cent, to 38,239.66, the S&P 500 gained 51.54 points, or 1.02 per cent, to 5,099.96 and the Nasdaq Composite gained 316.14 points, or 2.03 per cent, to 15,927.90.
Shares of Snap surged nearly 28 per cent after the social media firm beat first-quarter estimates for revenue and user growth. Pinterest shares also finished up 4 per cent.
Exxon Mobil lost ground by nearly 3 per cent after America's largest oil company missed analysts' estimates with first-quarter profit falling 28 per cent from a year ago.
Intel dropped 9.1 per cent after the chipmaker's forecast for second-quarter revenue and profit did not meet estimates. Intel faces weak demand for its traditional data center and PC chips.
Advancing issues outnumbered decliners by a 2.25-to-1 ratio on the NYSE. On the Nasdaq, 2,685 stocks rose and 1,460 fell as advancing issues outnumbered decliners by a 1.84-to-1 ratio.
The S&P 500 posted 21 new 52-week highs and eight new lows while the Nasdaq recorded 59 new highs and 88 new lows.
Volume on US exchanges was 9.88 billion shares, compared with the 11.01 billion average for the last 20 days. ― Reuters
