U.S. stocks rallied on Friday, fueled by better-than-expected profits from companies like Apple and KLA. The S&P 500 and Nasdaq Composite saw gains, offsetting earlier losses triggered by concerns about the AI boom's investment needs.
Apple and other large U.S. companies surpassing profit expectations are contributing to Wall Street 's recovery from the significant losses incurred at the start of the week. The S&P 500 index demonstrated a 0.4% increase in early trading, positioning itself for a mere 0.1% weekly decline after Monday's sharp drop fueled by concerns that the artificial-intelligence boom, which propelled the market to record highs, might not necessitate as much investment as previously anticipated.
The Dow Jones Industrial Average advanced 87 points, or 0.2%, by 9:35 a.m. Eastern time, while the Nasdaq composite surged 0.9%. Apple spearheaded the market rally, gaining 3.2% following the announcement of stronger-than-expected profits for the latest quarter. As the most valuable company on Wall Street, Apple wields significant influence over the S&P 500 and other indices. The company revealed a decrease in iPhone sales, but revenue from its services sector, encompassing offerings like AppleCare and its app store, reached a record high.KLA, a prominent supplier to the electronics industry, climbed 1.8% after reporting both profit and revenue figures that exceeded analysts' projections. The company attributed its success to expanding investments in artificial intelligence and high-performance computing. This surge helped mitigate the 6.3% decline experienced on Monday, when tech stocks globally plummeted following an announcement by DeepSeek, a Chinese upstart, claiming to have developed a large language model capable of rivaling the world's best without relying on top-tier chips. This development raised questions about the necessity of the anticipated massive investments in AI chips, data centers, and electricity.U.S. stocks also received support on Friday from the relatively subdued bond market, where escalating Treasury yields had exerted upward pressure in recent months. Treasury yields remained relatively stable following the release of an update on the inflation gauge favored by the Federal Reserve, which aligned closely with economists' expectations. The yield on the 10-year Treasury edged down to 4.51% from 4.52% late Thursday. Yields have been generally trending upward since September as the U.S. economy has proven more resilient than economists initially predicted. Furthermore, concerns about tariffs and other potential policies from President Donald Trump that could exacerbate inflationary pressures and elevate the U.S. government's debt have also contributed to the rise in yields. Trump has indicated that tariffs of 25% on imports from Canada and Mexico could commence as early as Saturday.On Wall Street, Walgreens Boots Alliance plummeted 14.1% after suspending its dividend and interrupting a streak of quarterly payouts to shareholders spanning over 90 years. Exxon Mobil dipped 1.2% despite reporting a stronger-than-expected fourth-quarter profit. The energy giant attributed its strong performance to increased production in the U.S. Permian basin and Guyana, but its revenue fell short of projections.In international stock markets, indices displayed modest gains in Europe following mixed performances in Asia. Japan's Nikkei 225 index rose 0.1% after a report revealed that the country's core inflation rate exceeded the central bank's 2% target, paving the way for potential interest rate hikes. South Korea's Kospi declined 0.8% upon resuming trading after a holiday break. Markets remained closed in Hong Kong and Shanghai for the Lunar New Year.
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