US Stock Markets Stage a Comeback Amid Tech Recovery and Bitcoin Stabilization
US stock markets experienced a notable upswing on Friday, reclaiming a portion of the significant losses incurred earlier in the week. This resurgence was driven by a recovery in technology shares and a halt in the recent slide of bitcoin, following several volatile trading sessions fueled by apprehensions regarding massive expenditures on artificial intelligence and their potential effects on corporate profitability.
Major Indices Show Positive Momentum
The S&P 500 index advanced by 0.9 percent, marking only its second gain in the past eight sessions. Meanwhile, the Dow Jones Industrial Average surged by 776 points, equivalent to a 1.6 percent increase, and the Nasdaq Composite rose by 0.5 percent during mid-morning trading in New York.
Chipmakers Lead the Recovery Effort
Chipmaking companies were at the forefront of this rebound. Nvidia saw its shares climb by 4.9 percent, which helped reduce a weekly decline that had exceeded 10 percent. Broadcom also gained 3.8 percent after experiencing sharp drops earlier in the week. According to the Associated Press, optimism about robust long-term demand for chips associated with artificial intelligence continued to bolster the sector.
AI Spending Concerns Impact Amazon
Despite the broader market recovery, worries over escalating AI investments persisted. Amazon shares tumbled by 8.5 percent after the company projected spending approximately $200 billion this year on areas including AI, chips, robotics, and low-earth-orbit satellites. Similar expenditure plans previously announced by Alphabet have raised questions about whether such substantial investments will yield sufficient future profits. As reported by Agence France-Presse, investors have become more cautious following a period where enthusiasm around AI propelled much of the technology sector. Chris Low of FHN Financial noted that markets are now reevaluating whether the recent sell-off was excessive, with traders believing some declines may have been "overdone."
Even with Friday's gains, the S&P 500 remained on track for its third weekly decline in four weeks.
Bitcoin Stabilizes and Crypto Stocks Surge
Bitcoin exhibited signs of stabilization after weeks of losses that erased more than half its value since its peak in October. The cryptocurrency recovered to around $68,000 after briefly dipping near $60,000 late on Thursday.
This movement provided a boost to stocks linked to the cryptocurrency sector. Robinhood Markets surged by 11.7 percent, Coinbase Global increased by 7.3 percent, and Strategy, a company known for holding significant amounts of bitcoin, jumped by 15.9 percent.
Gains in Consumer Sentiment, Airlines, and Smaller Stocks
US consumer sentiment offered additional support to the markets. A preliminary survey from the University of Michigan indicated a slight improvement in sentiment, contrary to expectations of a decline. This improvement was most pronounced among households that own shares.
Airline stocks also gained on hopes that stronger confidence would lead to increased travel spending. United Airlines rose by 5.4 percent, American Airlines gained 4.6 percent, and Delta Air Lines added 4.4 percent.
Smaller companies outperformed their larger counterparts, with the Russell 2000 index climbing by 2.3 percent. These firms are typically more sensitive to the overall strength of the US economy.
Bond Market Remains Steady
In the bond market, US Treasury yields remained largely unchanged. The yield on the 10-year Treasury held steady at around 4.21 percent, consistent with levels from late Thursday.
