Monday, May 20, 2024

Technology stocks lead Wall Street higher in early trading

by BIZ Magazine

NEW YORK (AP) — Stocks are opening higher on Wall Street, led by gains in the tech sector, which has been taking a beating over the past year. Salesforce rose nearly 4% in the early going Wednesday after becoming the latest tech company to announce layoffs. The company, a member of the Dow Jones Industrial Average, will cut 10% of its staff. The S&P 500 was up 0.6% shortly after the opening bell, and the Dow was up 0.4%. The Nasdaq rose 0.7%. Crude oil prices were down about 3%, leaving energy stocks as the only sector in the red. Treasury yields fell.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Wall Street pointed modestly higher Wednesday ahead of the release of notes from the most recent Federal Reserve meeting, which investors hope might hint at a less aggressive stance on interest rates, a tool that the Fed has used to tame inflation.

Futures for the benchmark S&P 500 index and the Dow Jones Industrial Average rose about 0.2%.

There is heightened concern that the Fed and other central banks might be willing to push economies into recession to extinguish inflation hovering at multi-decade highs. More hikes are on the way, but many are looking for any sign that a slowing economy will prompt the Fed and others to ease back.

“While the Fed expects to keep rates higher for longer, markets continue to push back, betting on easier policy,” said Rubeela Farooqi and John Silvia of High-Frequency Economics in a report. However, they said, “we do not think a pivot to rate cuts is likely this year.”

The Fed’s key lending rate stands at a range of 4.25% to 4.5%, up from close to zero following seven increases last year to cool economic activity and upward pressure on prices.

The U.S. central bank forecasts that it will reach a range of 5% to 5.25% by the end of 2023. It isn’t calling for a rate cut before 2024.

The U.S. government is due to release December employment figures Friday. The job market has remained very strong, which can undercut any potential move by the Fed to ease rates.

The central bank’s next decision on interest rates is set for Feb. 1.

Shares of Salesforce rose 3.7% in premarket after the cloud computing software company announced it is laying off about 10% of its workforce, more than 7,350 employees. It’s the latest round of job cuts in the tech industry as corporations cut back on software and other spending. The San Francisco company will also be closing some offices, according to a regulatory filing Wednesday.

In midday European trading, the FTSE 100 in London gained 0.5%, while the DAX in Frankfurt and the CAC 40 in Paris each rose 1.6%.

In Asia, the Shanghai Composite Index gained less than 0.1% to 3,118.94 while the Nikkei 225 in Tokyo tumbled 1.5% to 25,716.86 on its first trading day of the year.

The Hang Seng in Hong Kong rose 2.3% to 20,615.21. The Kosp in Seoul added 1.7% to 2,255.98.

Sydney’s S&P-ASX 200 advanced 1.6% to 7,059.20. India’s Sensex gained 0.2% to 61.294.20. New Zealand advanced while Southeast Asian markets declined.

U.S. markets fell Tuesday in the year’s first trading day after recording its biggest annual decline in 14 years in 2022. The S&P 500 lost 0.4% and the Dow slipped less than 0.1%. The Nasdaq composite dropped 0.8%.

Technology stocks were among the biggest weights on the market. Apple fell 3.7%, leaving its market value below $2 trillion for the first time since March 8, 2021. Shares in the iPhone maker fell nearly 27% in 2022, their first annual decline in four years.

Markets are seeking clues about the direction of the economy before corporate profit reports begin to arrive in mid-January. Analysts polled by FactSet expect earnings for companies in the S&P 500 to slip during the fourth quarter and remain flat for the first half of 2023.

In energy markets, benchmark U.S. crude tumbled $2.52 to $74.41 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.33 to $76.93 on Tuesday. Brent crude, the price basis for international oil trading, slid $2.71 to $79.39 per barrel in London. It lost $3.81 the previous session to $82.10.

The dollar edged down to 130.85 yen from Tuesday’s 131.03 yen. The euro advanced to $1.0602 from $1.0547.

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