NEW YORK: Product announcements by Google and Microsoft helped lift tech shares on Tuesday (Feb 7), while stocks finished a volatile session decisively higher after fresh Federal Reserve (Fed) comments viewed as muted on inflation.
Both Microsoft and Google parent Alphabet jumped more than 4% after announcing new artificial intelligence offerings, in what Microsoft CEO Satya Nadella called a technology “race”.
Meanwhile, Fed chair Jerome Powell acknowledged that there was still significant work to do to bring inflation under control, but did not shift significantly from his tone last week that markets had viewed as benign.
“Powell’s tone was a bit friendlier and I think the market interpreted that as a dovish sign,” said Steve Sosnick, chief strategist at Interactive Brokers.
The comments came after Friday’s strong jobs report that sparked worries about prolonged Fed interest rate increases.
The Dow Jones Industrial Average rose 265.67 points, or 0.78%, to 34,156.69, the S&P 500 gained 52.92 points, or 1.29%, to 4,164 and the Nasdaq Composite added 226.34 points, or 1.9%, to 12,113.79.
Wall Street’s main indices fluctuated wildly during and after Powell’s remarks, and analysts said volatility is unlikely to dissipate soon.
“Until we see softening and inflation throughout the economy and throughout the globe, it’s going to be hard to push the markets up in a decisive fashion,” said Carol Schleif, deputy chief investment officer at BMO Family Office.
The rally comes ahead of President Joe Biden’s annual State of the Union address, at which he is expected to highlight the robust jobs market and progress in mitigating inflation.
Among economic indicators, data released on Tuesday showed the US trade deficit grew US$103.0 billion from 2021 to US$948.1 billion last year, hitting a record.
Chemical giant DuPont jumped 7.5% as it reported better-than-expected profits and lifted its investor dividend by 9%. – AFP, Reuters