Yesterday’s Tech Stock Rally

In an era considered by many to be characterised by high levels of market volatility, Wednesday’s trading may have provided some encouraging signs to investors. Over the course of the trading day on Wall Street, several major Indices rallied above their starting points. Let’s take a closer look at how all this played out in New York City yesterday:

Buoyant Indices

Breaking a trend set soon after the beginning of the global COVID-19 pandemic, the tech-heavy Nasdaq (US-TECH 100) jumped into a bull market yesterday. Several key technology stocks seemed to attract the eyes of Wall Street traders, pushing the Index as a whole up just under 1.9% by the ring of the closing bell.

Trading trends throughout 2022 were not kind to technology and growth shares as this market sector faced strong headwinds emanating from the Federal Open Market Committee’s (FOMC) hawkish stance and continual interest rate hikes. Less than six months ago, in October 2022, the Nasdaq sank to a two-year low in the face of geopolitical instability and the aforementioned fiscal tightening in the United States.

However, following Federal Reserve Chairman Jerome Powell’s latest statements to the public regarding the near-term trajectory of the world’s largest economy’s monetary policy, the tide may be turning. A subtle change in this key policy maker’s verbiage could be detected by the savvy observer at Wednesday’s press conference; despite the Federal Open Market Committee’s decision to raise American interest rates by 25 basis points, or 0.25%, Powell referred to the need for ‘some’ hikes in the future, rather than ‘ongoing’ hikes.

This perceived softening of the Federal Reserve’s hawkish stance may have been the fuel needed for Wednesday’s bullish market trends. While the Nasdaq was the big winner on Wall Street, the S&P 500 (USA 500) and Dow Jones Industrial Average (USA 30) rose by 1.4% and 1% respectively as well. The general market picture was positive, but a few stocks in particular renewed their shine. (Source:Bloomberg)

Chip Wolves Leading the Pack

Continuing the tendencies observed throughout the past months as hopes of a nearing end to interest rate hikes have been fanned, investors seized the initiative yesterday and pushed tech stocks upwards. 

The Nasdaq-listed chipmaker Micron Technology (MU) rocketed up by 7% over the course of the trading day on March 29th. The American technology firm, which released Q2 results to the public yesterday, showed that its sales were down by more than half compared to a year ago, but this was not the full story.

The guidance provided by the denizens of Micron’s executive suite seemed to indicate that calmer waters are ahead for the company. Despite slack demand from the key smartphone and personal computer sectors for the firm’s product line, Chief Business Officer Sumit Sadana sees inventory returning to healthier levels by the end of 2023. Sadana predicts demand for chips rebounding from its recent doldrums, and the possibilities for Micron’s addressable market continuing to expand into 2025. Despite Micron’s raw Q2 figures perhaps painting a less-than-rosy picture, it seems that traders yesterday may have been swayed by the firm’s positive guidance.

The outlook for the chipmaking sector in general may have seemed on the up yesterday, as Intel (INTC), Marvell (MRVL), and Lam Research (LRCX) all caught significant tailwinds as well, by 7.5%, nearly 5.6%, and 6.3% respectively. 

Big Tech Joins the Party

However, yesterday’s tech mini-boom was not limited to chip manufacturers. Some of the biggest names in the global tech industry also saw increases in share value yesterday.

On Tuesday, Apple (AAPL) announced a change to the way its many users can fund their purchases via Apple Pay. Soon, consumers will be able to acquire their desired items on a sort of layaway, taking no-interest, no-fee loans from Apple to be paid back over a month and a half. This may have been part of the impetus for the firm’s share rise jumping by just under 2% yesterday. Industry peers Amazon (AMZN) and Microsoft (MSFT) also drew attention on New York’s trading floors Wednesday, marking jumps of 3% and 1.9% in share value respectively by the close of trading.

Despite the recent trends in technology stocks’ favour, some analysts are urging caution. As has been observed repeatedly in the past, if the Fed continues to hike interest rates for longer than expected, tech could drop yet again.