Strong gains were expected on Wall Street before the opening bell on Friday, led by Technology stocks that rebounded after the Federal Reserve hinted at the possibility of keeping interest rates elevated into 2024. Futures for the Dow Jones Industrial Average, S&P 500, and Nasdaq all indicated positive momentum. This surprising development came after a tumultuous week in the markets, with Wednesday seeing significant losses.
On Thursday, U.S. stocks rebounded after experiencing their worst day since September, and expectations are that the Federal Reserve will start cutting interest rates in May, after initially pushing back expectations from March. This shift in interest rate expectations signals a turn around after the Fed had hiked its main interest rate to the highest level since 2001, in an attempt to control inflation. High interest rates are known to slow the economy and negatively impact tech stocks among other investments.
In the tech sector, Amazon and Meta Platforms (parent company of Facebook) experienced significant gains due to better-than-expected revenue and profit reports. However, Apple saw a 3% decline despite positive financial results. The government also scheduled to release its first jobs report of 2024 later in the day, with economists expecting a slight decrease in hiring but still indicating a strong economy.
In global markets, the Shanghai Composite index and Hong Kong’s Hang Seng experienced declines while struggling with economic uncertainties and risks. This was partly attributed to high-stake “snowball derivatives” that yield high returns on gains but also lead to significant losses when share prices fall. Additionally, there was concern over possible U.S. controls on dealings with Chinese companies, further contributing to the sell-off of biotech companies.
The International Monetary Fund also reported a decrease in the growth of the Chinese economy, adding to the market uncertainties. Early European trading showed positive momentum, with markets such as France’s CAC 40, Germany’s DAX, and Britain’s FTSE 100 all gaining. In Japan, the Nikkei 225 finished with a 0.4% increase.
In energy trading, benchmark U.S. crude and Brent crude both experienced minor changes, while Exxon Mobil and Chevron reported quarterly earnings in the midst of fluctuations in crude prices. In currency trading, the U.S. dollar and euro both saw slight increases.
This market update is particularly crucial given the context of the global economic recovery following the effects of the COVID-19 pandemic. The anticipation of interest rate changes and the performance of major tech companies will be closely watched by investors, economists, and policymakers worldwide.
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