By Sruthi Shankar and Johann M Cherian
(Reuters) – U.S. stocks rallied on Friday, putting the tech-heavy Nasdaq on course for its best first-half performance in 40 years as Apple touched $3 trillion in market value and signs of easing inflation comforted investors.
Apple Inc breached the mark for the first time since January last year, after rising 1.5% to hit an all-time high of $192.40, on optimism about the potential for artificial intelligence and the iPhone maker’s ability to grow revenue.
Amazon, Microsoft, Alphabet and Nvidia rose between 1.2% and 3.3%, extending a blistering rally this year fueled by strong earnings and the AI buzz.
“The biggest companies are thriving right now because all the macro conditions are in favor of them,” said David Russell, vice president of market intelligence at TradeStation. “The PCE (Personal Consumption Expenditure) numbers give us a confirmation that the worst of the inflation crisis appears to have passed.”
A Commerce Department report showed the PCE index, the Fed’s preferred inflation gauge, advanced 3.8%, compared with a 4.3% rise in April. Excluding the volatile food and energy components, the PCE price index gained 0.3%, down from 0.4% in the previous month.
After the data, traders were pricing in an 86.8% chance that the Fed will hike rates by 25 basis points to 5.25%-5.50% range in its July meeting, according to CMEGroup’s Fedwatch tool, down slightly from the 89.3% on Thursday.
At 12:14 p.m. ET, the Dow Jones Industrial Average was up 216.72 points, or 0.64%, at 34,339.14, the S&P 500 was up 44.28 points, or 1.01%, at 4,440.72, and the Nasdaq Composite was up 175.78 points, or 1.29%, at 13,767.12.
Hawkish remarks from Fed Chair Jerome Powell and strong economic data this week boosted bets that Fed will continue to raise rates, but stock markets took comfort in signs of strength in the U.S. economy.
An upbeat first-quarter earnings season and optimism about the economy put the three main U.S. indexes on course for second-quarter gains. The Nasdaq was set for its best first-half performance in 40 years with a 31.5% gain.
The Nasdaq 100 index of top technology stocks was on track for its best first half on record with a 38.5% rise.
The CBOE Market Volatility Index, Wall Street’s fear gauge, slipped to a one-week low at 12.98 points.
Among other single stocks, Nike Inc shed 2.2% after it forecast first-quarter revenue below Wall Street expectations.
Carnival Corp jumped 9.3% after Jefferies upgraded the cruise operator’s stock to “buy” from “hold”.
Advancing issues outnumbered decliners by a 2.95-to-1 ratio on the NYSE and 1.55-to-1 ratio on the Nasdaq.
The S&P index recorded 70 new 52-week highs and no new lows, while the Nasdaq recorded 95 new highs and 57 new lows.
(Reporting by Sruthi Shankar, Johann M Cherian and Shashwat Chauhan in Bengaluru; Editing by Shinjini Ganguli)