Arrow-right Camera
The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Tech stocks push S&P 500 further into bull market

A man scrolls through his phone as an electronic board displays stock information in Sydney on May 20, 2019.  (Brendon Thorne/Bloomberg)
By Carly Wanna, Namitha Jagadeesh and David Watkins Bloomberg

The S&P 500 inched further into bull-market territory on Friday as technology shares continued to climb amid bets the Federal Reserve is nearing the end of its raising cycle.

The benchmark index added 0.1%, as tech and megacap shares drove another session of gains, with Tesla up 4.1% after General Motors announced it’s joining the company’s charging network.

Netflix rose 2.6% on a report it added U.S. subscribers after cracking down on password sharing.

Adobe gained another 3.4% amid the frenzy in stocks linked to artificial intelligence.

The S&P 500 has now surpassed a 20% gain from an October low, a common marker of a bull market, following a rise in tech stocks.

Analysts have warned the rally could stall ahead of next week’s interest-rate decisions from the Fed and the European Central Bank.

Unexpected hikes from two central banks this week have raised speculation that policymakers may have to keep rates higher for longer.

Meanwhile, U.S. data pointing to a cooling labor market has supported the consensus view that the Fed is likely to pause.

“We’ve become a little uncomfortable with the tech trade,” Stuart Kaiser, head of U.S. equity trading strategy at Citigroup, told Bloomberg TV. “There’s a scarcity of growth in the market, and the market is willing to pay a premium for that scarcity of growth.”

But the debate for investors is what can get the market rally to turn “into something that is maybe a little more durable and sustainable to the upside.”

Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management, also cautioned against assuming the recent upswing in equities can gain momentum.

“While many investors believe that passing this milestone puts markets in bull territory, it remains possible that we are seeing a bear market rally- a period of strong gains that occurs in the middle of a bear market,” she said.

“Until markets reach a new all-time high, it’s impossible to know whether the bear market trough – the ultimate low of the market cycle – is behind us.”

Elsewhere, Treasury yields rose after disappointing employment data from Canada.

The country’s economy ended its eight-month run of employment gains with minor job losses in May, signaling weakness in the labor market.

Swaps traders are pricing in roughly a one-third chance of a Fed hike next week, and almost 90% odds of one in July after an unexpected rate hike by the central banks of Canada and Australia this week.

In Europe, stocks edged lower after a downbeat outlook from Croda International weighed on chemical shares.

Japan’s Nikkei 225 capped a ninth week of gains, up 2.4%, for its longest streak in more than five years.

In currencies, the Turkish lira extended its decline to an all-time low against the dollar, taking its weekly drop to 10%.

President Recep Tayyip Erdogan completed key appointments of the economy team, which is expected to turn to more conventional policies.