Markets rose on Friday, boosted by earnings from parent company Google Alphabet Inc. and Microsoft Corp., two of the so-called Magnificent Seven stocks, both of which reported earnings and revenue figures.
Microsoft's revenue outlook for next quarter exceeded analyst expectations, while Alphabet announced it would pay a dividend of $0.20 per share. Alphabet rose more than 10% after the opening and Microsoft rose more than 2% on Friday.
Rallies in stock markets boosted broader markets, with the Nasdaq up 2.2% by mid-morning and the S&P 500 up about 1%. ETFs that track the indexes gained similarly: SPY, the SPDR S&P 500 ETF Trust was 1.1% higher, while QQQ, the Invesco QQQ Trust which tracks the tech-heavy Nasdaq, fell 1.7%.
MAGS, the Roundhill Magnificent Seven ETF that holds Mag 7 shares in its fund rose more than 3%.
Microsoft and Alphabet's earnings surprises help improve the less rosy picture that tech companies painted earlier this earnings season. Since last week, tech gains have taken center stage as investors wondered whether the mega-cap tech companies that have led the markets for so long would continue to do so in the future.
While Microsoft and Alphabet's profits made investors happy, Tesla Inc., Netflix Inc., and Meta Platforms Inc. reported disappointing results that kept markets under pressure earlier this week.
The Dow Jones changed little and added half a percentage point. DIA, the SPDR Dow Jones Industrial Average ETF Trust rose by 0.2%.
Better-than-expected earnings from Microsoft and Alphabet have helped investors look beyond the inflation figures released on Friday. Personal consumption expenditures (PCE) for March rose 0.3% this month, the Commerce Department reported Friday. The monthly increase was in line with the expectations of economists polled by Dow Jones. But the year-on-year increase of 2.7% (minus volatile food and energy categories) underlined how stubborn and persistent inflation has been.
The data came just a day after the Commerce Department released first-quarter PCE figures, giving investors a taste of what was to come today. Thursday's PCE advance reading torpedoed investors' hopes that interest rate cuts would come soon.
PCE remains the Fed's inflation gauge of choice and is a key piece of information for policy meetings on rate cuts. The Fed is expected to hold rates steady at next week's FOMC meeting, but questions still remain about when investors – and the economy – can anticipate relief from a high interest rate environment.
According to the CME Fed Watch ToolThe markets do not expect an interest rate cut until September.
Bond yields fell on Friday, just a day after data emerged that economic growth is slowing. When bond prices rose (prices and yields have an inverse relationship), TLT, the iShares 20+ year government bond ETFrose by almost 1%.
Fixed income investors have been left reeling as concerns and questions about interest rates have sent bond ETFs on a rollercoaster ride.
Source: etf.com
As investors continued to cheer about better-than-expected tech gains, tech ETFs remained the most active in terms of trading volume, data from etf.com shows. TQQQ, the ProShares UltraPro QQQ and SQQQ, the ProShares UltraPro Short QQQ with bets on falling technology prices seeing trading volumes of 36.2 million shares and 67 million shares respectively.
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