Tech Stocks Attempt to Rebound After Investors Reassess Rate Outlook

Barry Adams
01 Feb, 2024
New York City

Stocks rebounded following a sharp decline in the previous session after Federal Reserve Chairman Powell said interest rate cuts in March were not likely.

The S&P 500 index and the Nasdaq Composite advanced more than 0.3% in early trading after investors reassessed their interest rate outlook after the Federal Reserve held its key lending rate for the fourth time in a row.

In Wednesday's trading the S&P 500 index declined 1.6% and the Nasdaq Composite dropped 2.2%. 

Investors sold high-growth and tech stocks after Chairman Powell stressed that higher rates are needed until solid evidence emerges that inflation is on a sustained path to the target rate of 2%.

However, Chairman Powell left the door open for a rate cut later in the year but did not provide a specific timeline.

 

U.S. Indexes and Yields

The S&P 500 index increased 0.5% to 4,895.43, and the Nasdaq Composite rose 0.7% to 15,195.03.

The yield on 2-year Treasury notes decreased to 4.23%. 10-year Treasury notes declined to 3.99%, and 30-year Treasury bonds edged down to 4.19%.

WTI crude oil increased $0.70 to $76.55 a barrel, and natural gas prices increased 3 cents to $2.12 a thermal unit.

Gold decreased by $4.03 to $2,033.17 an ounce and extended the previous week's gains after the U.S. dollar drifted slightly lower in international trading.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.62.

 

U.S. Stock Movers

Qualcomm declined 1.8% to $145.83 after the chipmaker reported better-than-expected fiscal first quarter revenue.

Revenue in the quarter increased 5% to $9.9 billion from $9.5 billion, net income increased by 24% to $2.7 billion from $2.2 billion, and diluted earnings per share advanced to $2.46 from $1.98 a year ago.

During the first quarter, the company returned $1.7 billion to stockholders, including $895 million, or $0.80 per share, of cash dividends paid and $784 million through repurchases of 6 million shares of its common stock.

The company estimated revenue in the fiscal second quarter between $8.9 billion and $9.7 billion and diluted earnings per share between $1.73 and $1.93.

Align Technology soared 12.2% to $300.0 after the orthodontics company reported better-than-expected sales and earnings in its latest quarter.

Revenue in the fourth quarter increased 6.1% to $956.7 million from $901.5 million, net income soared three-fold to $124.0 million from $41.8 million, and diluted earnings per share rose to $1.64 from 54 cents a year ago.

The company guided first quarter revenue between $960 million and $980 million and estimated 2024 total revenues to be "up mid-single digits over 2023."

Wolfspeed declined 4.5% to $31.0 after the company's fiscal third-quarter revenue fell short of market expectations.

Revenue in the fiscal second quarter ending in December increased to $208.4 million from $173.8 million; net loss expanded to $144.7 million from $90.9 million; and diluted loss per share rose to $1.15 from 73 cents a year ago.

The company estimated fiscal third quarter revenue between $185 million and $215 million, net loss from continuing operations between $134 million and $155 million, and diluted loss per share between $1.07 and $1.23.