"Thanks to MS and Meta"... Major Tech's Strong Performance Lifts All Three Indices [New York Stock Exchange Briefing]

Nasdaq 1.52%↑

All three major indices of the New York Stock Exchange rose together. Investor sentiment was ignited as Microsoft (MS) and Meta announced strong performances. News also came that the US and China are engaging in trade negotiations.

On the 1st (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 40,752.96, up 83.6 points (0.21%) from the previous day. The S&P 500 index rose 35.08 points (0.63%) to 5,604.14, and the Nasdaq index jumped 264.40 points (1.52%) to close at 17,710.74.

By sector, healthcare and pharmaceuticals plunged more than 2%, but technology soared nearly 3%. Communication services, consumer discretionary, energy, and industrials also rose more than 1%.

MS and Meta's strong performances led the upward trend. MS announced after the market closed the previous day that its first-quarter revenue was $70.07 billion and earnings per share (EPS) was $3.46. Both revenue and EPS exceeded market expectations compiled by LSEG. Meta also reported first-quarter revenue of $42.31 billion and EPS of $6.43. Likewise, both exceeded market forecasts significantly. With this news, both companies, which had surged in after-hours trading the previous day, continued their strong performance after the market opened. MS surged nearly 8%, and Meta also jumped more than 4%.

Jed Ellerbrook, portfolio manager at Argent Capital Management, said, "There are few stocks completely free from tariffs and trade wars under President Donald Trump, but the AI sector is much less affected than investors think," adding, "We are currently in the early stages of a very steep growth curve, and the same goes for AI infrastructure."

Thanks to the strong performances of the two companies, other big techs also showed strength. Nvidia rose nearly 3%, and Broadcom also rose more than 2%. Alphabet also showed a strong performance of over 1%. After the market closed, Amazon and Apple also announced their first-quarter results. Both companies exceeded market expectations in terms of revenue and EPS, but the market reaction was lukewarm.

Amazon announced that its first-quarter revenue was $155.67 billion. EPS was $1.59. Both exceeded expectations. However, as the second-quarter revenue guidance (target) did not meet market expectations, Amazon's stock is falling in after-hours trading. Apple reported first-quarter revenue of $95.36 billion and EPS of $1.65. However, the stock is down more than 4% in after-hours trading.

News that the US government approached the Chinese government for trade negotiations also boosted risk appetite. China's state-run broadcaster CCTV's social media 'Weiyuantantian' revealed on its account the previous afternoon that "recently, the US has been actively contacting China through various channels to discuss tariff issues."

Kevin Hassett, chairman of the White House National Economic Council and economic advisor, also said in an interview with US CNBC, "We are expecting progress with China," adding, "We were pleased to see China lift several tariffs on US products last week." He also added, "News about tariffs will definitely come out before the end of the day." There is speculation that a result of an agreement with one of the major trading countries will come out.

The US manufacturing sector continued to contract for the second consecutive month, but it exceeded market expectations, offsetting the impact.

The Institute for Supply Management (ISM) announced that the April manufacturing Purchasing Managers' Index (PMI) recorded 48.7. It is the second consecutive month of contraction. However, it exceeded the market expectation of 48.

The number of new unemployment insurance claims filed in the US for the week exceeded expectations and surged.

According to the Department of Labor, the number of new unemployment insurance claims for the week ending April 26 was 241,000 on a seasonally adjusted basis. It increased by 18,000 from the previous week.

In particular, the number of weekly continuous unemployment insurance claimants recorded 1,916,000 on a seasonally adjusted basis as of the week ending April 19. It is the highest since the week ending November 13, 2021. This means that the labor market is showing signs of slowing down as the number of people claiming unemployment insurance for more than a week has surged.

According to the Chicago Mercantile Exchange (CME) FedWatch Tool, the probability of the federal funds rate being held steady in the futures market by the end of June rose to 42.3%. It jumped nearly 10 percentage points from 32.9% at the close of the previous day. On the other hand, the probability of a 25bp (1bp=0.01% point) cut fell from 63.2% to 55%. The probabilities of a 25bp cut and holding steady are narrowing.

Jinyoung Ki, Hankyung.com reporter young71@hankyung.com