Wall Street's rollercoaster ride: Tech stocks and Bitcoin's volatile comeback.
The financial world witnessed a dramatic turnaround on Friday as Wall Street rebounded from its mid-week slump. This recovery was fueled by a resurgence in technology stocks and a temporary halt to Bitcoin's freefall.
The S&P 500 surged 1.2%, aiming for only its second positive day in eight, while the Dow Jones Industrial Average climbed a substantial 1.7% (814 points) by 11 a.m. ET. The Nasdaq composite also joined the rally with a 1% increase.
Chipmakers played a pivotal role in this upswing, with Nvidia soaring 6.2%, mitigating its weekly loss, and Broadcom advancing 5%. These gains were attributed to the optimism surrounding investments in artificial intelligence technology. Amazon, for instance, plans to invest US$200 billion this year, targeting AI and other cutting-edge technologies, but this massive spending has raised eyebrows, prompting questions about its long-term profitability.
Despite Friday's rally, the S&P 500 is on track for its third weekly loss in four weeks. The market sentiment has been dampened by concerns over substantial AI investments by tech giants and the potential disruption AI could cause to software companies. This anxiety intensified after Anthropic, an AI firm, unveiled free tools that could automate legal services, sending software stocks into a tailspin.
Bitcoin, after a prolonged decline, found some stability, rebounding above US$68,000 after dipping towards US$60,000. This recovery provided a boost to crypto-related stocks, with Robinhood Markets leading the S&P 500 with a 13.5% surge, followed by Coinbase Global's 9.5% rise.
The metals market also experienced a respite from its recent volatility, with gold prices climbing 1.6% to US$4,968.20 per ounce, while silver dipped slightly. These precious metals had seen jaw-dropping rallies earlier, driven by investors seeking safe havens amid political unrest, skepticism about the U.S. stock market's valuation, and global debt concerns.
Smaller U.S. companies and those reliant on domestic consumer spending also contributed to the market's recovery. A preliminary survey from the University of Michigan indicated a slight improvement in consumer sentiment, contrary to economists' expectations, with stock-owning households showing the most optimism.
Airline stocks soared on the prospect of increased consumer spending on travel, with United Airlines, American Airlines, and Delta Air Lines all posting significant gains.
In contrast, European markets were mixed, with Stellantis, a major auto manufacturer, plunging 26% after announcing a substantial charge related to its electric vehicle production adjustments. Asian markets were mostly down, except for Japan's Nikkei 225, which gained 0.8%, boosted by Toyota Motor's leadership transition news.
The bond market remained relatively stable, with the 10-year Treasury yield holding at 4.21%. The two-year Treasury yield, more sensitive to Federal Reserve expectations, ticked up to 3.50%, despite President Donald Trump's vocal calls for rate cuts to stimulate the economy, which could exacerbate inflation.
