Susannah Streeter, Chief Investment Strategist, Wealth Club: "The S&P 500 has hit milestone territory, surging past the psychologically important 7,000 mark for the first time. Tech is once again setting the tone as investors bet on the AI boom continuing, fuelling the prospects for listed companies.
Sentiment has been boosted by a raft of results, showing demand for semi-conductors is racing ahead. Dutch chip equipment maker ASML reported record fourth quarter orders and boosted its outlook for the year. Seagate Technologies, the data storage provider, also unwrapped results which exceeded expectations. Revenue rose 22% compared to a year ago, but guidance for the current quarter also beat expectations, showing huge demand for cloud and edge computing environments, crucial for new artificial intelligence tools.
Results like these are helping to put worries to bed about the AI boom faltering any time soon. It’s helped power up the share price of Intel, Micron Technology and other chip stocks, with giant Nvidia joining the party and heading higher. Investors are wagering that the AI juggernaut has much further to run.
With stocks gaining yet more ground, it’ll help with wealth perceptions among richer, invested Americans who are more likely to keep spending, supporting growth in the economy. But a K shaped world is emerging, with confidence among poorer citizens taking a hit as parts of the US jobs market freeze up, just as the wealthiest in society enjoy another upswing in their financial situation.
These are trends Fed policymakers will have been keeping an eye on in their decision over interest rates. The decision later today looks set to be a holding one, with rates not likely to budge. But with the labour market cooling, and the latest core inflation reading coming in lower than expected, markets are still betting on borrowing costs coming down this year, which is helping put fire under the tech rally.''
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