In a robust rally on Thursday, Big Tech took the lead in propelling the stock market forward, fueled by Apple’s (AAPL) stellar performance, marking its best day since May 2023. The market indices responded positively, with the S&P 500 (^GSPC) surging by 0.9%, the Nasdaq Composite (^IXIC) leading the gains with a remarkable rise of over 1.3%, and the Dow Jones Industrial Average (^DJI) notching up a solid 0.5% increase. As a result, the S&P 500 is now inching closer to its all-time closing high of 4,796.56.
The driving force behind the market’s upward trajectory was the strong performance of Big Tech stocks, spurred by an optimistic artificial intelligence (AI)-fueled revenue outlook from TSMC (TSM), a crucial supplier to tech giants Apple and Nvidia (NVDA). Despite TSMC reporting a dip in profit, the results exceeded Wall Street estimates. This positive news had a cascading effect, leading to a significant uptick in shares of AMD (AMD) and other chipmakers, with TSMC’s own shares soaring by more than 9%.
Adding to the positive momentum, Apple received a boost of over 3% in its stock value following an upgrade from Neutral to Buy by Bank of America. The optimism stems from expectations that Apple’s new Vision Pro headset could stimulate increased hardware sales for the tech giant. This further contributed to the overall bullish sentiment in the market.
In parallel developments on Thursday, Atlanta Fed President Raphael Bostic shared his perspective on the Federal Reserve’s stance, indicating that he does not anticipate interest rate cuts until the third quarter. This timeline contrasts with the market’s current projection for a rate cut in March, unless there is “convincing” evidence of a decline in inflation. Bostic’s comments provided insights into the Fed’s cautious approach, aligning with a later timeline for potential rate adjustments.
Market dynamics were further reflected in the CME FedWatch Tool, which showed a notable shift in traders’ expectations. The odds of a rate cut in March decreased by more than 10 percentage points compared to a week ago. This change suggests a reevaluation of the market’s outlook on the Federal Reserve’s monetary policy, with a growing consensus that a rate cut in March may be less likely than previously anticipated.
In conclusion, Tuesday’s stock market rally, driven by the impressive performance of Big Tech, particularly Apple, showcased the resilience and optimism prevailing in the market. The positive indicators from TSMC, coupled with the endorsement from Bank of America for Apple’s growth prospects, contributed to a day of significant gains. Additionally, insights from Atlanta Fed President Raphael Bostic provided clarity on the Federal Reserve’s cautious stance, influencing traders’ expectations and shaping the market sentiment in the short term.
Source: Yahoo Finance
