NEW YORK: US stocks rose in volatile trading on Friday as inflation showed signs of cooling, but a rout in tech shares amid renewed fears of AI-driven disruption capped gains, setting the S&P 500 and the Dow on track for their worst weekly loss since November.
Data on Friday showed US consumer prices increased less than expected in January, prompting traders to slightly raise the odds of an interest-rate cut by the Federal Reserve in June to 69 percent from 63 percent earlier.
“The important takeaway for both (the) rate markets and equities is that the trend in disinflation continues. It kind of reinforces the idea that we are past peak inflation concerns,” said Michael Metcalfe, head of market strategy at State Street Markets.
“This is painting a picture of a continued improving inflation outlook, which will allow for rates to fall later in the year.”
Equity markets have pulled back from record levels as fears of AI-led disruption fueled a selloff in sectors spanning software and insurance to trucking companies, while stronger-than-expected January jobs data sowed doubts about the pace of monetary policy easing this year.
Cboe’s volatility index, Wall Street’s fear gauge, hit a one-week high of 22.40 points before easing slightly.
At 11:55 a.m. the Dow Jones Industrial Average rose 222.36 points, or 0.45 percent, to 49,674.34, the S&P 500 gained 36.38 points, or 0.53 percent, to 6,869.14, and the Nasdaq Composite added 72.55 points, or 0.32 percent, to 22,669.69.
With earnings season more than halfway through, AI capex outlays emerged as a dominant theme for “Magnificent Seven” companies, whose cumulative investments are projected to reach about USD650 billion. Investors are now demanding real payoffs as they continue to punish sectors they fear could be squeezed by growing competition. Big tech stocks weighed, with Nvidia and Alphabet down 1.5 percent and 0.7 percent, respectively.
Healthcare shares supported markets on Friday, with Eli Lilly and UnitedHealth adding 0.8 percent and 1.2 percent, respectively. Moderna jumped 8.9 percent after posting fourth-quarter revenue above expectations.
Applied Materials shares advanced 9.3 percent after the chipmaking-equipment firm forecast second-quarter revenue and profit above Wall Street expectations.
Networking equipment provider Arista Networks gained 9.8 percent after forecasting annual revenue above expectations.
Advancing issues outnumbered decliners by a 3.08-to-1 ratio on the NYSE, and by a 3.06-to-1 ratio on the Nasdaq.
The S&P 500 posted 28 new 52-week highs and five new lows, while the Nasdaq Composite recorded 40 new highs and 108 new lows.
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