Big technology has made profits with better revenue.
News Analysis
US stocks gathered for four consecutive days to outweigh the week. It was the longest winning streak since January, led by a major engineer on better revenue. Negative trade headlines and easing low yields on bonds also helped investors’ enthusiasm for stocks.
The S&P 500 index closed at 5,525 on April 25, up 4.59% that week. The Dow Jones industrial average rose 2.48% to close at 40,113. Nasdaq rose 6.73% to close the week at 17,382, while the Russell 2000 finished at 1,957, up 4.09%.
Among the profits was the beaten big tech share. This was higher due to bargain hunting and better revenue than expected from Texas Instruments and the alphabet respectively.
Texas Instruments, the designer and manufacturer of analog and embedded semiconductors for industrial, automotive, personal electronics, communications equipment and enterprise systems, has beaten revenue and revenue estimates and provided rosy guidance on the strong demand for industrial and automotive chips.
Google’s parent company, Alphabet, has beaten revenue estimates by generating substantial advertising revenue, raising dividends and allowing $70 billion in stock repurchasing.
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Elsewhere in the tech sector, Tesla shook a disappointing revenue report, earning 18% on news that the U.S. Department of Transport is relaxing some autonomous driving rules.
EV Pioneers have been betting on it to keep the buzz alive for the brand.
The winner for another week was Nvidia. This was hoping to gather alongside other sectors and ease trading tensions between the US and China.
Among the losers this week was consumer stocks led by Procter & Gamble and Pepsi. The companies reported substantial losses, reflecting growing consumer anxiety over the state of the economy and increased competition.
Another loser was T-Mobile, due to slow growth in phone subscribers as competition between Verizon and AT&T is growing.
Relaxing negative headlines on trade tensions and some positive comments from Fed officials helped the stock gathering. They helped to cut bond yields, with the 10-year Treasury bond yields closing at 4.24% from the first 4.40% of the week.
Financial liability yields are discount factors in traditional equity valuation models, such as discounted cash flow models. Lower bond yields have led to a higher stock valuation, making stocks more attractive to investors.
Despite the Federal Reserve’s beige book released on April 23, a decline in bond yields occurred, providing a pessimistic outlook for inflation.
“IT service prices rose at a modest pace over the quarter. Room prices at hotels in the Greater Boston area increased modestly from the previous year,” it reads.
“Retail prices have moderately dropped year-on-year in wholesale seafood prices, including automobile prices, but prices for certain metals imported from China have risen sharply.”
The decline in bond yields and stock gatherings could indicate that despite news about rising inflation, both the credit and stock markets have already been priced in the worst-case scenario of shortfalls from Washington’s trade policy, and the revision could be over.
Gaurav Mallik, chief investment officer at Pallas Capital Advisors, is based in Braintree, Massachusetts, with $3 billion in assets and believes the stock market is currently in range due to headlines from Washington.
“We’ve seen deep daily stocks, turning the big-up day back the next day and leading to the sideline market,” he told The Epoch Times.
“The horizontal market is common for investments and can take several months to complete the revision, which I still believe is a revision given the rate of decline.”
However, he said volatility over the past few weeks provides a good indication of the risk of paying too much attention to daily stock movements.
“Reducing downday inventory exposure for fear of further declines reduces the risk of missing out on the market’s final rebound.
Mallik advises investors to stick to high quality cash-generating sectors such as utility and healthcare.
“Many of the companies in these sectors have resilient business models, growing dividends and declining volatility,” he said.
“Even with uncertainty from tariffs, the AI story remains unharmed, and utilities play an important role in providing the energy needed to build and power AI.”
