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U.S. stocks rebounded Friday as results from Alphabet (GOOG, GOOGL) and Microsoft (MSFT) revived hopes of a sustained rally led by Big Tech, although a reading of the inflation gauge preferred by the Federal Reserve showed that price pressures remain stubborn.
The S&P 500 (GSPC) rose 1%, while the tech-heavy Nasdaq Composite (IXIC) climbed 2%. The Dow Jones Industrial Average (DJI), which includes fewer technology stocks, rose 0.4% or 150 points.
Gains from Alphabet and Microsoft gave stocks a boost, rising about 10% and 2%, respectively. The "Magnificent Seven" duo's stellar results showed how growing demand for AI can boost cloud revenues and indicated that both companies stand to benefit from the boom. Alphabet's market capitalization has exceeded 2 trillion, joining an elite group.
This performance has reinforced confidence that the benefits of Magnificent Seven technologies can lift the broader market out of the doldrums. Those hopes were dented by Meta's (META) disappointing forecasts earlier in the week.
At the same time, the market priced in the latest reading of the Fed's preferred inflation gauge, the Personal Consumption Expenditures Price Index, for March. This report's "core/" measure, which excludes the cost of food and energy, rose 2.8% from last year, above estimates of 2.7%. but unchanged from the previous annual increase.
This reading comes as Wall Street has furiously lowered its expectations for a Fed rate cut this year. Already, since the start of the year, traders have recalibrated their bets from seven to just one.
Among other individual moves, shares of Snap (SNAP) soared 27%, as Wall Street welcomed signs that an overhaul of its digital advertising business is finding traction.
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