Source : THE AGE NEWS
By Stan Choe
Netflix, Oracle and other technology stocks are lifting US indexes as their profits pile higher and excitement builds around the moneymaking prospects of artificial intelligence.
The S&P 500 was up 0.8 per cent in midday trading and on track to surpass its all-time high set early last month. The Dow Jones was up 136 points, or 0.3 per cent, as of 11:55 a.m. Eastern time, and the Nasdaq composite was 1.5 per cent higher. The Australian sharemarket is set to retreat, with futures at 4.54am AEDT pointing to a fall of 18 points or 0.2 per cent, at the open. The ASX added 0.3 per cent on Wednesday.
Wall Street continued to march higher. Credit: AP
Netflix helped lead the way after it said live events like football games and a Mike Tyson-Jake Paul fight helped it add nearly 19 million subscribers during the latest quarter. It also reported stronger profit than analysts expected and said it’s raising subscription prices in the United States and other countries. Netflix jumped 11.1 per cent.
The streaming giant joined a lengthening list of companies that have topped analysts’ profit expectations for the end of 2024. Such results support their stock prices and counteract the downward push they’ve felt from rising Treasury yields in the bond market.
The rising yields, which were caused in part by worries about stubborn inflation and the US government’s swelling debt, had knocked down stocks and halted their record-breaking run that carried through 2024, at least briefly.
Procter & Gamble rose 2.9 per cent after the company behind Charmin, Crest and Pampers reported stronger profit and revenue for the latest quarter than expected. It also said it’s sticking with its financial forecasts for the full fiscal year, even though rising commodity costs and the stronger value of the US dollar against other currencies are hurting its results.
Travelers climbed 4.2 per cent after likewise topping analysts’ expectations for profit. The insurer said gains for its investments and growth in net written premiums helped it overcome losses created by Hurricane Milton, which hit Florida’s Gulf coast in October, and other catastrophes.
Some of the market’s most forceful pushes upward came from AI-related companies. Oracle climbed 6.5 per cent to add to its 7.2 per cent rise the day before, ahead of the expected announcement that came about Stargate, a joint venture the White House said will start building out data centres and the electricity generation needed for the further development of AI in Texas.
The partnership formed by Oracle, OpenAI and SoftBank will invest up to $US500 billion ($796 billion). SoftBank Group’s stock in Tokyo rose 10.6 per cent.
Other AI-related stocks also climbed, furthering their already fantastic run. Nvidia, the company whose chips are powering much of the move into AI, rose 3.9 per cent. Its stock is above $US146 after sitting below $US18 just two years ago.
They helped offset a 4 per cent drop for Textron. It reported a better profit for the latest quarter than analysts expected, but its revenue fell short of forecasts. The company behind Bell helicopters and Cessna airplanes also gave a forecast for profit for this upcoming year that fell short of some analysts’ expectations.
In stock markets abroad, indexes rose in Europe after finishing mixed in Asia.
In the bond market, the 10-year Treasury yield rose to 4.60 per cent from 4.57 per cent late Tuesday. It had been largely regressing since an encouraging update on inflation last week, but it’s still well above where it was in September, when it was below 3.65 per cent.
Strategists at BlackRock Investment Institute say they expect rates to stay higher for longer for a wide range of reasons, including an ageing workforce and very high levels of debt for the US government.
“Investors are demanding more compensation for the risk of holding long-term bonds, driving the term premium to a decade high,” according to the strategists led by Jean Boivin.
For stocks to remain resilient and keep rising despite the bite of high interest rates, companies will need to keep delivering solid profit growth, and Boivin said he sees encouraging signals.
In the cryptocurrency market, which has surged amid hopes that President Donald Trump will make Washington friendlier to the industry, bitcoin was below $US104,000. It had set a record above $US109,000 on Monday. Some sourness is lingering after Trump and his wife launched meme coins, which critics said looked like an unseemly cash grab.
