Tech Stocks Rebound As Magnificent 7 Roar On Strong Earnings, Energy Giants Tumble: What's Driving Markets Friday?

Strong earnings reports from Alphabet Inc. GOOGL and Microsoft Corp. MSFT have restored positive sentiment in the market, sweeping away fears of increasing risks of stagflation that had emerged from Thursday’s data.

Although the latest PCE inflation report signaled higher-than-expected annual readings, they failed to meaningfully impact on already low expectations for Fed rate cuts. Rather, investors opted to focus on positive signals stemming from corporate earnings.

The S&P 500 gained over 1%, and is up by 2.8% this week, on track for its best week since late October 2023. The Nasdaq 100 outperformed with a 1.8% increase, pushing the weekly performance to over 4%, also eyeing its best week in seven months.

A significant amount of support for the broader market came from the Magnificent Seven, with the group gaining a combined market cap of $400 billion in a day, more than offsetting losses seen on Thursday. The Roundhill Magnificent Seven ETF MAGS rallied 3.5%.

Small caps also saw robust gains, with the iShares Russell 2000 ETF IWM up 1%. The big underperformer was the energy sector, as its two major oil giants – Exxon Mobil Corp. XOM and Chevron Corp. CVX – failed to impress investors with their quarterly results.

Treasury yields were slightly softer, although remained at elevated levels, indicating they had already absorbed the rising inflation narrative over the past weeks.

Both gold and oil held steady at $2,300 per ounce and $83 a barrel, respectively. Bitcoin BTC/USD softened below $64,000, on track for a fourth straight negative week.

Friday’s Performance In Major US Indices, ETFs

The SPDR S&P 500 ETF Trust SPY rose 1.2% to $509.49, the SPDR Dow Jones Industrial Average DIA rose 0.6% to $383.06 and the tech-heavy Invesco QQQ Trust QQQ rallied 1.8% to $431.95, according to Benzinga Pro data. 

Sector-wise, the Communication Services Select Sector SPDR Fund XLC outperformed, up 2.6%, followed by the Technology Select Sector SPDR Fund XLK and the Consumer Discretionary Select Sector SPDR Fund XLY, both up 1.5% The Energy Select Sector SPDR Fund XLE was the major laggard, down 1.1%.

Friday’s Stock Movers

• Alphabet Inc. soared by 10% after a double beat in both earnings and revenue estimates last quarter. Shares are on track to their strongest performing day since July 2019.
• Microsoft Corp. rose 2.5% after reporting better-than-expected results last quarter.
• Amazon.com Inc. AMZN rose 4% amid bullish speculations over next week’s earnings report.
• Nvidia Corp. NVDA rose 6%, bolstered by rising expectations for AI spending and fueling a widespread rally in chipmakers.
• Intel Corp. INTC tanked 10%, sharply underperforming compared to industry peers, on a Q1 revenue miss.
• Other companies reacting to earnings were Exxon Mobil, down nearly 3%, Chevron Corp, down 0.2%, AbbVie Inc. ABBV, down over 5%, HCA Healthcare HCA, down over 3%, Colgate-Palmolive Co. CL, up 1.6%, Phillips 66 PSX, down 3.7%, AON plc AON, down over 8%, LyondellBasell Industries NV LYB, up 2.6%, Ball Corp. BALL, up 7.6%, Avantor Inc. AVTR, down 4%, Saia Inc. SAIA, down 20%, Autoliv Inc. ALV, up 5%, KLA Corp. KLA, up 5%, Capital One Financial Corp. COF, up 0.5% and Snap Inc. SNAP, up 30%.

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Image generated using artificial intelligence via Midjourney.