US stocks soared to their strongest weekly performance this year, fueled by a surge in the technology sector. The rally was sparked by positive earnings reports from industry giants like Microsoft and Google's parent company, Alphabet. These reports, coupled with inflation data that fell within expectations, instilled optimism on Wall Street.
The benchmark S&P 500 index climbed over 1% to close around 5,100 on Friday, marking its highest weekly gain since early November 2023. The tech-heavy Nasdaq 100 fared even better, surging nearly 2%. The Dow Jones Industrial Average, though less dramatic, also managed a respectable 0.4% increase.
Microsoft proved to be a key driver of the rally. Investors cheered the company's better-than-expected sales and profit figures, which were attributed to robust demand for its cloud computing and artificial intelligence offerings. Microsoft's stock price responded accordingly, jumping over 4% in after-hours trading.
Google's performance was equally impressive. The tech giant's strong cloud business results surpassed analyst expectations, propelling its stock price a significant 11% higher in after-hours trading. This positive sentiment rippled throughout the broader technology sector, with many other major players experiencing notable gains.
The positive earnings reports weren't the only factor contributing to the market's bullish mood. The release of inflation data played a crucial role. The data, which came in roughly in line with forecasts, eased concerns about rising prices and aggressive interest rate hikes from the Federal Reserve. This provided a sigh of relief for investors, who had been wary of potential policy changes that could dampen economic growth.
Analysts believe that the confluence of positive earnings reports and relatively stable inflation data has instilled a sense of cautious optimism in the market. While some uncertainties remain, particularly regarding geopolitical tensions and the ongoing war in Ukraine, the strong showing from the tech sector has undoubtedly bolstered investor confidence.
Looking ahead, market watchers will be keenly observing upcoming earnings reports from other industry leaders. These reports will provide further insights into the overall health of the corporate sector and could significantly influence the market's trajectory in the coming weeks.