By Chibuike Oguh
NEW YORK (Reuters) – U.S. stocks closed higher on Friday, buoyed by a rally in mega-cap growth stocks following robust quarterly results from tech heavyweights Alphabet (NASDAQ:) and Microsoft (NASDAQ:), alongside subdued inflation data.
Investors cheered Alphabet’s first-ever dividend, its $70 billion stock buyback program and better-than-expected first-quarter results. Shares rose 10% to a record high, pushing the Google parent company’s market value above $2 trillion.
Shares of Microsoft rose 1.8% after third-quarter revenue and profit beat Wall Street estimates, thanks to gains from the adoption of artificial intelligence (AI) in its cloud services.
Other mega-cap growth stocks also closed higher: Amazon.com (NASDAQ:) rose 3.4%, Nvidia (NASDAQ:) gained 5.8% and Meta Platforms (NASDAQ:) rose 0.4%. However, Apple (NASDAQ:) fell 0.3% and Tesla (NASDAQ:) closed 1.1% lower. On Wednesday, Meta’s results had disappointed investors even as the company ramped up spending on AI.
Six of the 11 major sectors finished higher, led by gains in communications services, technology, consumer discretionary and materials.
The S&P 500 and Nasdaq posted their biggest weekly percentage gains since early November 2023. The benchmark S&P 500 posted three weeks of losses, while the Nasdaq ended four straight weeks of declines.
“Microsoft and Google’s earnings reports eased much of the concern that spending on data centers and AI, which Meta increased a day earlier, would compress margins,” said Tom Plumb, president and chief portfolio manager. at Plumb Funds in Madison, Wisconsin.
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“Both Google and Microsoft had indicated that with their current capital plans they still expected their margins to increase. That allayed a lot of the fear people had about the growth of data computing,” Plumb added.
Data from the US Commerce Department shows that monthly inflation rose moderately year-on-year in March, while on a monthly basis it was in line with estimates.
The report provided some relief to financial markets roiled by concerns about stagflation, a day after data showed inflation rose sharply in the first quarter and economic growth slowed.
After the data, money markets have priced in a greater chance of a rate cut by the Federal Reserve in September. The yield on the 10-year government bond fell after the data and was last at 4.6630%.
The S&P 500 rose 153.86 points, or 0.40%, to 38,239.66, the S&P 500 gained 51.54 points, or 1.02%, to 5,099.96 and gained 316.14 points, or 2, 03%, to 15,927.90.
Shares of Snap rose nearly 28% after the social media company beat expectations for revenue and user growth in the first quarter. Shares of Pinterest (NYSE:) also rose 4%.
ExxonMobil (NYSE:) lost ground by nearly 3% after America’s largest oil company missed analysts’ estimates and first-quarter profit fell 28% from a year ago.
Intel (NASDAQ:) fell 9.1% after the chipmaker’s forecast for second-quarter revenue and profit fell short of expectations. Intel is facing weak demand for its traditional data center and PC chips.
On the NYSE, advancing issues outnumbered declining issues by a ratio of 2.25 to 1. On the Nasdaq, 2,685 stocks rose and 1,460 fell as advancing issues outnumbered declining stocks by a ratio of 1 .84 to 1.
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The S&P 500 posted 21 new 52-week highs and eight new lows, while the Nasdaq posted 59 new highs and 88 new lows.
Volume on US exchanges was 9.88 billion shares, compared to the 20-day average of 11.01 billion.
