Nasdaq Index, Dow Jones, S&P 500 News: Big Tech Fuels Market Rally with Stellar Earnings

Market Rally on Big Tech Gains

S&P 500 futures climbed on Friday, driven by strong earnings from major tech firms Alphabet and Microsoft, positioning the index for a positive closure after three consecutive weeks of losses. The Nasdaq and Dow Jones also showed notable movements, reflecting optimism in the broader market.

At 11:30 GMT, Dow Futures are trading 38334.00, up 46.00 or +0.12%. S&P 500 Index Futures are at 5122.00, up 39.75 or +0.78% and Nasdaq-100 Index Futures are trading 17756.50, up 189.00 or +1.08%.

Tech Giants Lead the Charge

Alphabet’s shares surged nearly 12% after hours as the tech giant not only beat first-quarter earnings expectations but also announced its first-ever dividend alongside a substantial $70 billion buyback program. Microsoft also contributed to the upbeat mood, with shares increasing by 4% post-earnings, as the company surpassed fiscal third-quarter forecasts set by Wall Street analysts.

Market Response to Economic Indicators

Despite the positive moves by tech stocks, the broader market had faced challenges earlier in the week. The Dow Jones experienced a significant drop of 375 points on Thursday, while both the S&P 500 and Nasdaq fell slightly by 0.5% and 0.6% respectively. This downturn was triggered by U.S. economic data indicating a slowdown in GDP growth to 1.6% in the first quarter, below the expected 2.4%. Inflation concerns were heightened by the personal consumption expenditures price index, which rose at a 3.4% pace, intensifying the inflationary outlook.

Sector-Specific Impacts and Forecasts

In the energy sector, mixed earnings reports influenced stock performances. Exxon Mobil’s shares dipped following earnings that fell short of expectations, influenced by declining refining margins and dropping natural gas prices. Conversely, Chevron managed to exceed earnings expectations despite a year-over-year profit decline, facing headwinds in its refineries and international gas operations.

Market Outlook

Looking ahead, traders are adjusting their expectations, with the futures market now pricing in only one potential rate cut this year, anticipated in September. The Federal Reserve, faced with persistent inflation, is likely to adopt a cautious stance, potentially slowing balance sheet reductions before considering rate adjustments. Additionally, upcoming economic reports, particularly the March PCE reading, are expected to show continued inflation pressures, which could influence the Fed’s policy decisions in the coming months.

In summary, while Big Tech’s earnings have provided a temporary uplift to market sentiment, underlying economic challenges and sector-specific headwinds suggest a cautious approach to trading in the near term.

Technical Analysis

The E-mini Nasdaq-100 Index continues to rebound on Friday, marking a strong recovery for the week.

Although the short-term and intermediate trends are down, the market may have enough upside momentum to challenge the 50-day moving average at 18167.00.

Should momentum turn lower, traders will set their sights on a retest of last week’s low at 17113.25. Taking out this level will signal a resumption of the downtrend with the 200-day moving average at 16800.41 the next likely target.