The world’s leading index, the S&P 500, lagged behind for its fourth straight week of gains. The Nasdaq has risen for seven straight weeks. This is how the three major indexes performed on Wall Street on Friday:
- The broad S & P 500 index rose 0.11 percent.
- The Nasdaq Composite Technology Index rose 0.16 percent.
- The Dow Jones Industrial Average rose 0.13 percent.
Everyone talks about artificial intelligence
Technology stocks led the rally on Friday, with electric car maker Tesla leading the way. The stock rose four percent on the news that General Motors will use Tesla’s charging network.
Netflix rose more than 2 percent on an update on subscriber growth in the US after the streaming service cracked down on password sharing.
For large parts of the trading day, the S&P 500 rose so high that it entered a “bullish market.” This means that it has risen by at least 20 percent from its previous low, which was in October. But in the end, the rally lost a little air, and the bull market situation was not realized. On the other hand, the Nasdaq has outgrown a bull market after rising nearly 30 percent since its December low.
Robin Øvrebø manages nearly five billion crowns in Odin Fund USA. On Friday, he landed at Gardermoen after a week’s stay in New York, which was filled with company meetings. There he learned what corporate America is focusing on now.
– All companies talk about AI and that all companies should have an AI strategy and approach. Everything from consulting firms to software companies and even restaurant companies are talking about how AI can make their operations more efficient, he says, adding:
It’s still too early to say how it will end. Select companies and industries have been doing this for some time, but in the last two to three quarters, it’s gotten more attention because we as consumers have had an introduction via Chat GPT, Overbaugh says.
On Friday, software company Adobe rose more than three percent after announcing plans for a new subscription service for artificial intelligence.
You want to pay off debt
Technology stocks are particularly sensitive to high interest rates since many of them are cashing in on big dividends in the future. The sector has soared, even as central banks have pushed interest rates up at full speed. However, an important point is that the huge tech giants, who are making huge amounts of money here and now, are behind much of the hike. Plus, the market rate lowers interest rates if you look more than half a year into the future.
Markets are now awaiting interest rate decisions next week from the US Central Bank and European Central Bank. There, they will keep a close eye on both rate setting and the kind of signals central bank governors send.
At the moment, the market is roughly pricing in a new price hike of 0.25 percentage points in the US,
Increasing interest costs are now affecting a number of companies and many companies have a significant amount of debt. Overbo says it gives increased focus on paying down debt and desiring a stronger balance sheet.
Otherwise, companies are reporting some inflation, but not to the same extent as before, according to the director. The question that both investors and companies ask themselves is whether or not price changes will be permanent. According to companies, the job market remains tight in large parts of the economy. It’s still pretty good to order, but with a few exceptions. They are starting to see cases where consumers are increasingly choosing cheaper products over more expensive brands. In addition, consumption tends towards services rather than goods.
– There is still stronger demand for services such as restaurants, hotels, airline tickets and experiences, says Overbaugh.
Top of Wall Street: Memories of 2008
In Europe, it was a quiet day on the stock exchanges. This was also the case in Norway. By the way, this has been the case in recent weeks.
In a lengthy interview with the American Business Journal CNBC Today’s market reminds him a lot of the period from March to June in 2008, says Bob Michell, head of credit and securities at JPMorgan Chase.
In March 2008, JPMorgan bought out struggling investment bank Bear Stearns with help from the US Federal Reserve. The previous year, Bear Stearns had closed two hedge funds that had invested in complex mortgage instruments and suffered huge losses.
– The market saw it this way: there was a crisis, there was a response from the authorities, and the crisis was resolved. Then you had a steady three-month recovery in the stock markets, Michelle says.
Because after the acquisition, the appetite for risk has returned a little. Stock markets rose.
But in the fall of 2008 it collapsed. The state banks Fannie Mae and Freddie Mac were put under general management. Lehman Brothers went bankrupt. Stock markets collapsed.
We quickly move to the present.
Last month, JPMorgan Chase bought collapsed First Republic Bank after a long period of turmoil and uncertainty surrounding many regional banks in the US.
Michelle leads JPMorgan Chase’s fixed income management unit and oversees more than $700 billion in client assets. He describes the next few months as the calm before the storm. Looking at previous rate hike cycles since 1980, recessions began on average 13 months after the US central bank last rate hike.
Banktoppen believes the US will be in recession a year from now.
– It would be a miracle if this ended without a recession, he says.
CNBC reports that not everyone shares Michelle’s point of view. Jan Hatzius, an economist at Goldman Sachs, recently lowered the probability of a recession within a year to 25 percent. Even among those who see a recession coming, few believe it will be as bad as the 2008 financial crisis.(conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For more terms see here.
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