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- 1 Tech giants are posting positive earnings this season, with AI stocks leading the race.
- 2 Amidst the looming fear of recession and proposed interest rate hikes, the market is doing reasonably well.
U.S. investors are excited about artificial intelligence. This resulted in tech-heavy Nasdaq stocks ending on higher notes on July 25, 2023, ahead of earnings. There has been a buzz surrounding AI in recent months. It caused Nvidia’s market cap to cross a Trillion dollars for the first time. With giants like Alphabet and Microsoft to announce earnings reports after the market bell on July 26, 2023, Wall Street is rejoicing.
AI Mania Driving Nasdaq to Higher Notes Amid Earnings
In recent years, Microsoft and Alphabet have been pretty active in developing artificial intelligence. The tech giants launched an array of AI products. For instance, the immensely popular OpenAI, backed by Microsoft, launched ChatGPT in 2022. Investors speculate that these products could deter these giants from their cloud business.
The United States Federal Reserve is planning to hike the interest rate by another 25-basis point soon. Policymakers still need clarification about how the recent economic data should weigh in for the hike. Experts argue that the rate hike would be the second last hike, and there would wait for another. Additionally, this scenario is mainly affecting tech stocks.
A recent survey concludes that consumer confidence jumped to a two-year high in July 2023 despite the looming fear of recession. This storyline has resulted in positive earnings in the current season because they seemed optimistic about the labor market.
How is the Wall Street Fighting the Fear of Recession?
In 2023, the tech-heavy NASDAQ Composite Index saw healthy growth. The noticeable gains in rate-sensitive mega-cap growth companies fueled this rally. If all goes well, it would eventually lead to the end of the United States Federal Reserve’s strict cycle. Also, the companies outside the tech realm are performing significantly well because their lower valuations attract investors.
For 13 days straight, the blue-chip Dow rose, even when Boeing Co.’s (NYSE: BA) capped gains fell by 0.87%. RTX Corp. (NYSE: RTX) fell 10.2% after announcing that most of its Pratt & Whitney GTF engines that make Airbus A320 neo jets fly would require “accelerated removals and inspections.”
The S&P composite 1500 passenger airline sub-index suffered 3.45%, while Alaska Air saw a 9.7% fall in its annual revenue growth. Dow Jones Industrial Average gained 26.83 points, aka 0.08%, to 35,438.07. S&P 500 gained 12.82 points or 0.28% to 4,567.46 and the Nasdaq Composite gained 85.69 points or 0.61% to 14,144.56.
In the last 20 trading days, the United States exchanges saw a volume of around 9.75 Billion shares. Most of the 11 significant S&P 500 sectors remained calm, but material stocks gained 1.76%.
The S&P 500 reported nearly 37 new 52-week highs and never wrote a single low. Nasdaq Composite registered about 74 new highs but also posted 101 new lows.
The above data suggest that despite the looming fear of hikes in interest rates and impending recession, the market is still vastly buoyant and is gearing up for future scenarios.
If the world economy successfully defeats the recession before it arrives, the current gains will surely help the market touch new highs.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
