Tech stocks lift Wall Street to new highs after Fed’s stimulus comments
Apple, Microsoft, Amazon and Google boost tech-heavy Nasdaq as Dow slows and S&P 500 banking index falls
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Last modified on Mon 30 Aug 2021 14.53 EDT
Technology stocks have lifted Wall Street to record highs after the US Federal Reserve’s dovish comments eased fears of a sudden tapering in monetary stimulus and boosted optimism around an economic recovery.
Apple jumped 2.3% to an all-time high, while Microsoft, Amazon and the Google owner Alphabet, rose between 0.9% and 1.3%, helping the tech-heavy Nasdaq outperform the S&P 500 and the Dow Jones.
High-growth tech stocks tend to benefit from expectations of lower rates because their value rests heavily on future earnings.
The benchmark index is tracking its longest monthly winning streak since 2018 on the promise of cheap money, with investors shrugging off signs of a slowing economic recovery and surging Covid-19 cases.
The Fed chair, Jerome Powell, said on Friday that the central bank would continue to be cautious in its approach to tapering its massive pandemic-era stimulus and reaffirmed a steady economic recovery.
“The market was wholly prepared for a taper timeline last week and the Fed not really commenting has helped give markets an added push on hopes that easy policies will help offset some risks around rising infection cases,” said Ross Mayfield, an investment strategist at the investment firm Baird in Louisville, Kentucky.
“Although, if the Fed continues to be so dovish in its policy meetings going ahead, markets might think that there are some problems brewing in the economic recovery process.”
The S&P 500 has risen 3.2% so far in August – a seasonally weak period for stocks – and Wells Fargo analysts said last week they expect the index to rise another 8% by the end of the year.
It is also on track to log one of its best year-to-date returns through August of the past six decades, said Chris Larkin, managing director of trading at E*TRADE Financial. By 11:55am the S&P 500 and the Nasdaq Composite had added 0.59% and 0.91% respectively.
The Dow Jones Industrial Average, on the other hand, was up just 0.1% as economically sensitive energy stocks slipped 0.2%. Falling bond yields also pressured bank stocks, with the S&P 500 banking index down 1.2%.
US-listed shares of the Chinese gaming firm NetEase slumped 3.6% as Chinese regulators slashed the amount of time players under the age of 18 can spend on online games to an hour on Fridays, weekends and holidays.
All eyes this week will be on the Labor Department’s monthly jobs report, which could set the stage for the Fed’s policy meeting on 21-22 September.
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