US tech stocks poised to end weak month with a bounce ahead of Apple earnings
Wall Street stocks rose on Thursday as traders expressed optimism about upcoming quarterly earnings from tech titans Apple and Amazon amid a bruising month of losses.
The tech-focused Nasdaq Composite share index had risen 3 per cent by mid-afternoon in New York, following better than expected earnings from Facebook owner Meta on Wednesday after the closing bell.
The index is nevertheless on track to fall nearly 10 per cent in April, in what would be its worst monthly performance since March 2020.
Meta was trading 18.7 per cent higher on Thursday.
The broad-based S&P 500 added 2.5 per cent, but is poised for a loss of more than 5 per cent this month, also its worst performance since March 2020.
Shares in Apple and Amazon rose 4.2 per cent and 5 per cent respectively as investors awaited their quarterly updates.
“The mood in the market has improved markedly this morning,” said Candice Bangsund, portfolio manager at Canadian asset manager Fiera Capital. “[But] the macroeconomic backdrop remains fraught with uncertainties,” she added, citing China’s coronavirus lockdowns and the US central bank being poised to raise borrowing costs to battle soaring inflation.
Tech stocks, many of which fared well during the pandemic-induced era of ultra-loose monetary policy, “remain vulnerable to rising interest rates”, Bangsund said.
Thursday’s gains came even as the US economy contracted unexpectedly in the first quarter of the year, with GDP dropping 1.4 per cent on an annualised basis following a 6.9 per cent rise in the last three months of 2021. The overall slowdown masked strong spending by consumers and businesses, however, and is unlikely to change the Federal Reserve’s calculus at its May meeting at which it is expected to raise interest rates by 0.5 percentage points.
Earlier this month, Fed chair Jay Powell said it was “appropriate in my view to be moving a little more quickly” towards tightening monetary policies.
The yield on the 10-year US Treasury note — a benchmark for global borrowing costs — rose by 0.03 percentage points to 2.86 per cent as the price of the debt fell. The policy-sensitive two-year note rose by 0.04 percentage points to 2.63 per cent.
The US dollar index, which measures the reserve currency against six others, added 0.7 per cent, having earlier reached its highest point since 2002 as traders piled into bets on aggressive Fed action.
“Not only do you have the Fed hiking considerably more aggressively than central banks in other developed markets but every time you get concerns about Russia and Ukraine [the dollar] is the ultimate safe haven,” said Seema Shah, chief global strategist at Principal Global Investors.
The Japanese yen weakened further on Thursday to cross the ¥130 mark against the dollar, a multi-decade low, after the Bank of Japan vowed to keep bond yields at zero just as the Fed and other central banks prepare to raise interest rates rapidly.
In Europe, the Stoxx 600 share index closed 0.6 per cent higher.
