US stocks were poised to rebound on Friday as results from Alphabet (GOOG, GOOGL) and Microsoft (MSFT) revived hopes of a Big Tech-led rally. But a key upcoming inflation report could throw a spanner in the works.
Futures on the S&P 500 (^GSPC) rose about 0.8%, while contracts on the tech-heavy Nasdaq 100 (^NDX) jumped 1%. Futures on the Dow Jones Industrial Average (^DJI), which includes fewer technology stocks, rose 0.1%.
Gains from Alphabet and Microsoft give stocks a boost after Thursday’s selloff, with gains of about 12% and 4%, respectively. The “Magnificent Seven” duo’s stellar results showed that cloud revenues have been boosted by strong demand for AI – and that both can benefit from this boom.
This has rekindled confidence that the benefits of Magnificent Seven technologies can lift the broader market out of the doldrums – confidence that had been shaken by Meta’s (META) disappointing forecasts earlier in the week.
At the same time, the market is bracing for Friday morning’s release of the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures Price Index for March. Stocks sold off Thursday after the first-quarter U.S. GDP report delivered a double whammy: much slower economic growth and higher-than-expected inflation — even as signs indicate price pressures are more worrying.
Investors are closely watching the PCE report, which would confirm that inflation is accelerating again, which would argue in favor of a smaller and later rate cut by the Fed. Already, since the start of the year, traders have recalibrated their bets, going from seven rate cuts in 2024 to one.
With that in mind, some investors are bracing for the 10-year Treasury yield (^TNX) to rise above the key 5% level, amid a gain of about 80 basis points this year. The benchmark index’s yield was trading around 4.7% on Friday.
In other individual moves, shares of Snap (SNAP) soared 26% in premarket trading as Wall Street welcomed signs that an overhaul of its digital advertising business is finding traction in its after-hours report. ‘opening.
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