Investing.com – US equities opened higher on Friday, with a clear hunt for tech stocks after another decline on Thursday.
By 09:35 am ET (13:35 GMT), the Dow Jones Industrial Average rose 153 points, or 0.6%, to 27.687 points. The S&P 500 and the Nasdaq Composite rose 0.4%.
The market was supported by strong reports released after the close of trading on Thursday by both software giant Oracle Corporation (NYSE: ORCL) and Peloton Interactive Inc (NASDAQ: PTON), a maker of high-quality exercise bikes. These reports have restored confidence in the reason that drove the growth of the Nasdaq over the summer, namely that disruption due to the pandemic will bring quick benefits to companies that help remote work or training.
Peloton and Oracle shares rose 4.9%.
Previously, market participants did not pay attention to the numbers showing stronger than expected inflation in the US in August. The consumer price index (CPI) rose 0.4% to 1.3% from a year ago. After adjusting for volatile food and energy prices, the core CPI rose 0.4% to 1.7%, the highest level since April, and is apparently back to the Federal Reserve's 2.0% target. Given that the Fed said it would allow a 2% overshoot to compensate for a time when inflation was low, there is essentially no reason to fear that it will tighten its policies in such a preemptive manner.
The rise in the index was driven by higher prices for used cars as people avoid public transport, and higher costs of moving and storing household goods, reflecting a sharp increase in activity in the housing market since the start of the pandemic.
However, the market rally at the end of the week was relatively weak, which showed that prices could both go down and up. Apple (NASDAQ: AAPL) rose a modest 0.1%, while Amazon (NASDAQ: AMZN) rose 1.0% and Microsoft (NASDAQ: MSFT) rose 0.7%. Tech giants' shares were responsible for nearly all of the market's summer profits, making them all poised for consolidation.
Electric truck maker Nikola Corp (NKLA) continued to fall following an attack on it on Thursday by short-selling company Hindenburg Research. Nikola (NASDAQ: NKLA) was down another 8.0%, but was only poised to fall 2% during the week, despite an earlier announcement by General Motors (NYSE: GM) of a $ 2 billion investment.
Nikola's larger electric vehicle competitor, Tesla Inc (NASDAQ: TSLA), lost earnings earlier and fell 1.4% after reporting it would begin exporting electric vehicles from its Shanghai plant. The report said sales in China, the world's largest electric vehicle market, were weaker than expected.
By Jeffrey Smith