Big tech drives US stocks up, bonds fall

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Apple’s gains pushed US stocks higher even after a fresh batch of data cleared the way for the Federal Reserve to remain aggressive.

The S&P 500 and the tech-heavy Nasdaq 100 rose more than 1%.

Apple supported both indexes after delivering just enough good news in its quarterly report on Thursday.

Shares of Microsoft and Google’s parent Alphabet Inc. also rose, leading to a two-day decline.

Amazon.com plunged as much as 12%, falling below its $1 trillion market value.

Lackluster earnings from big tech companies such as Amazon, Alphabet and Meta Platforms Inc. have kept investors on edge this week.

And despite estimates well above analysts, Apple has consistently warned of a slowdown in the holidays.

But disappointing corporate reports aren’t enough to prompt the Fed to pivot, according to Andrew Patterson, senior international economist at Vanguard.

“The Fed is looking for signs of easing or easing pressures in the broader economy, in financial markets,” Patterson said by phone.

“Weak earnings are no reason for them to take their foot off the tightening accelerator. In fact, it gives them hope that they are having the impact they expect.

Friday’s data showed a core gauge of US inflation accelerating in September, while consumer spending remained resilient, bolstering the Fed’s case for another giant rate hike next week. .

US employment costs have also risen at a healthy pace, which should keep the central bank on course.

However, other data released this week, including weaker-than-expected US home sales, indicate that Fed tightening is already hitting the economy.

Economists still expect the Fed to hike rates by three-quarters of a percentage point for the fourth straight time next week. Treasuries remained weaker as hopes of a pivot crumbled.

The ECB hiked a second consecutive 75 basis points on Thursday, but dropped a prior reference to rate hikes continuing for “several meetings”, an outcome seen as dovish.

The central bank has a small margin of error after German inflation unexpectedly accelerated this month to 11.6% from a year earlier – far exceeding all estimates from a Bloomberg survey whose median forecast was 10.9%.

The Bank of Japan maintained its negative rate, 10-year yield cap and asset purchases at the end of a two-day policy meeting, on the advice of 49 economists polled by Bloomberg.

Chinese assets remain in focus, with overseas investors selling off a record amount of mainland Chinese stocks this week and sending Hong Kong stocks to their lowest level in 13 years.

President Xi Jinping’s tightening grip on power has not had the same impact domestically, with mainland investors seeking bargains in Hong Kong.

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