April 25, 2024

Wall Street Climbs As Megacaps Rise

On Monday, US stocks climbed thanks to megacap growth shares, as Wall Street extended its recent rally due to investor optimism that achieving a soft economic landing is possible for the US Fed.

Growth stocks give a boost

There was a 0.6% gain in shares of Apple Inc., while a 0.5% and 3.1% rise was recorded in Microsoft Corp and Tesla Inc., respectively.

These stocks gave the Nasdaq and the S&P 500 their biggest boost, as there was a decline in the US Treasury yields.

There was a surprise reduction in the lending rates by the Chinese central bank in an attempt to boost demand after the economy showed an unexpected slowdown in July.

There were strong gains also recorded in the utilities and consumer staples sectors. Since mid-June, there has been a sharp rebound in the S&P 500 index.

Last week, the benchmark US index received support from signs that inflation may have finally reached its peak in the previous month.

However, the index is still down by 10% since its value on December 31st. Market analysts said that participants believe the Fed would begin cutting rates soon and this would benefit the equity market.

Indexes rise

There was a 0.45% increase in the Dow Jones Industrial Average, which climbed by 151.39 points, to reach 33,912.44.

The S&P 500 also rose by 0.40%, which saw it increase by 16.99 points to reach 4,297.14. A 0.62% gain in the Nasdaq Composite saw it rise by 80.87 points to reach 13,128.05.

Since March, the Federal Reserve has increased the interest rates rather aggressively in order to combat the rising inflation.

Some investors are concerned that an aggressive stance by the US central bank could eventually drive the economy into recession.

Stock multiples can become depressed because of higher interest rates, especially when it comes to growth stocks like technology.

The S&P 500 growth index notched a better performance than the S&P 500 value index for the day. There was a 2% decline in the S&P 500 energy index.

Quarterly reports

Some big retailers are scheduled to publish their quarterly reports this week, which will bring an end to the reporting period for the second quarter.

Home Depot Inc. and Walmart Inc. are due to publish their reports before the final bell on Tuesday, with the former trading flat and the latter rising by 0.3%.

This week, Target Corp is also scheduled to report its second quarter results. Since July 1st, there has been an improvement in the estimated growth earnings of the S&P 500 companies for the second quarter.

Investors were also taken by surprise because of news from some US firms, as they had been expecting gloomier results for both the economy and businesses.

There was a 0.6% drop in the US-listed shares of e-commerce giant Alibaba Group Holding Ltd. The US exchanges recorded the lowest trading volume so far in the year.

There were just 9.59 billion shares changing hands, as opposed to the average of 10.97 billion for the complete session in the last 20 days.

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