The Market Continues to Rise on the Back of a Tech Boom and Hopes for Fed Easing
Market news 25 apr
The U.S. stock market pushed higher for a fourth consecutive session, driven by strong gains in major indices. The Dow Jones Industrial Average jumped nearly 500 points, the S&P 500 climbed 2.0%, and the Nasdaq Composite surged 2.7%. Since its April 8 closing low of 4,982.77, the S&P 500 has now rallied more than 10%.
Key Drivers of the Rally (Rally? LOL)
Short covering and fear of missing out. Traders unwinding bearish positions and chasing further upside fueled the buying momentum.
Strength in mega-caps and semiconductors. The PHLX Semiconductor Index (SOX) jumped 5.6%, and the Vanguard Mega Cap Growth ETF (MGK) gained 3.1%, bolstered by better-than-expected earnings from Texas Instruments and Lam Research.
Falling bond yields. The 10-year Treasury yield dipped eight basis points to 4.31%, and the 2-year yield fell seven basis points to 3.79%, creating a more supportive environment for equities.
Macroeconomic Backdrop
Labor market resilience. Initial jobless claims rose by 6,000 to 222,000, in line with expectations, while continuing claims dropped to a 10-week low of 1.841 million.
Capital-goods orders. March orders for nondefense capital goods ex-aircraft ticked up 0.1% month-over-month, matching consensus forecasts.
Chicago Fed national activity. The index fell to −0.03 in March versus a projected +0.12, signaling a slight cooling in activity.
Existing home sales. March sales plunged 5.9% to a six-month low of 4.02 million units, below the 4.13 million expected.
Federal Reserve officials struck a cautiously dovish tone, underpinning both equities and bonds. Cleveland Fed President Loretta Mester indicated that a rate cut in June is possible if incoming data are “clear and compelling.” Fed Governor Christopher Waller added that the Fed stands ready to ease policy if higher tariffs lead to a deterioration in the labor market.
Corporate Earnings Highlights
Alphabet (GOOGL): Shares rose 3% in aftermarket trading after reporting $90.23 billion in revenue—12% year-over-year growth—beating the $89.15 billion consensus. CEO Sundar Pichai highlighted the company’s AI-driven progress.
Intel (INTC): Stock fell 6.4% despite a Q1 beat of $0.13 adjusted EPS on $12.7 billion in sales, roughly flat from a year ago.
Merck & Co. (MRK): Generated $15.5 billion in Q1 revenue, driven by oncology blockbuster Keytruda, which brought in $7.2 billion.
Semiconductor names: STMicroelectronics and Lam Research both jumped 6% after topping expectations. Other winners included NXP, GlobalFoundries, and Lattice Semiconductor.
Fiserv (FI): Shares plunged 17% as growth in its Clover payment unit slowed, worrying analysts about future projections.
European stocks advanced, with the Euro Stoxx 50 up 0.32%. China’s Shanghai Composite climbed to a three-week high (+0.03%), and Japan’s Nikkei 225 rose 0.49%. This week, investors are focused on first-quarter earnings results and any developments in U.S.-China trade talks. On Friday, the University of Michigan’s revised April consumer sentiment index is due (expected at 50.8). According to Bloomberg Intelligence, S&P 500 Q1 earnings consensus stands at +6.7% year-over-year (down from +11.1% in early November), while full-year 2025 earnings growth is forecast at +9.4% (versus +12.5% in January).