FX168 Financial News (Europe) News On Friday (April 26), US stock index futures were higher, driven by strong profits from the #科技 # “Big Seven” member Google parent company Alphabet and Microsoft. Overall, the US stock market fluctuated again in April after strong performance in the first quarter of 2024.

Google's parent company Alphabet soared 12% in pre-market trading and is expected to increase its market capitalization by more than $230 billion, while Microsoft rose 4% because the latest quarterly results surpassed Wall Street expectations.

Bank of America strategists said that the US stock market will continue to rely on a few large stocks to guide the direction until rising real interest rates raise concerns about a recession.

Justin Onuekwusi, chief investment officer at St James Place Management, said: “We are facing an unstable situation, and the profits of several large companies are driving sentiment across the market.”

“We've seen some fluctuations in earnings and lower interest rates being priced, and this is likely to continue.”

According to J.P. Morgan strategists, the profits of nearly 80% of the S&P 500 companies that have published financial reports so far have exceeded analysts' expectations.

The strategists wrote that despite this, the stock price response was not impressive. The better-than-expected performance showed below-average room for growth, and stocks that did not meet expectations were being punished more than usual.

At the same time, traders have reduced their bets that the Federal Reserve will cut interest rates this year, and the further escalation of the situation in the Middle East has boosted commodity prices and heightened concerns about inflation. #美联储政策转向 #

Despite data showing that the US economy is strong and the 10-year US Treasury yield climbed to a nearly six-month high of more than 4.70%, the stock market showed resilience.

Bank of America, a strategist led by Michael Hartnett, wrote that the market is currently in an “unlandable” situation, which means that with economic growth still strong, interest rates will remain at a high level for a longer period of time.

However, strategists say the risk of accelerated inflation will have a negative impact on risky assets, cause volatility and benefit cash, gold and commodities.

Together, the top 10 US stocks accounted for a record 34% of the market value of the S&P 500 index.

Meanwhile, the top 10 global stocks accounted for a record 23% of the market value of the MSCI Global Index.

They wrote in a report that this concentration will remain the same until the actual yield on 10-year treasury bonds (interest rate adjusted to reflect the real cost of capital) rises to around 3%, “or higher yields combined with higher credit spreads threaten the recession.”

The rise in inflation-adjusted bond yields is seen as an indicator of tight financial conditions and a common way for stock market bubbles to burst.

Despite a turbulent April, the performance gap between the “Big Seven” of technology, including Nvidia (Nvidia), Apple (Apple), and Amazon (Amazon), and other companies in the market is still huge since the beginning of this year.

The strong results announced by Microsoft and Alphabet on Thursday are expected to drive technology stocks to continue to rise.

If Friday's pre-market gains remain unchanged, Alphabet's market capitalization is expected to break through $2 trillion.

The Dow Jones index fell sharply by 375 points on Thursday, while the S&P 500 index and the Nasdaq index fell slightly by 0.5% and 0.6%, respectively. The current declines were all triggered by US economic data. The US GDP growth rate slowed to 1.6% in the first quarter, lower than the forecast of 2.4%.

Furthermore, the personal consumer spending price index rose by 3.4%, increasing concerns about inflation.

In the face of continued inflation, the Federal Reserve may take a cautious stance and may slow the rate of balance sheet contraction until interest rate adjustments are considered.

The March PCE data released later is expected to show continued inflationary pressure, which in turn will affect the Federal Reserve's policy decisions over the next few months.