A raft of strong economic reports propelled share prices to yet another fresh high on Friday (3221.2). Stocks have jumped 28.50% this year. It is an extraordinary rise in the context of this year’s trade spat between the US and China, which has dominated the media headlines. According to Friday’s revised GDP report, investment in intellectual property products hit a record 5.10% of real GDP in Q3. Spending on software jumped by an annualised 9.88% q/q.
The rise in the S&P 500 IT index (46.7%) reflects powerful forces driving innovation within technology. Semiconductors & semi-conductor equipment posted the biggest increase within the IT index last week, up 4.61%. Even Intel, the perennial laggard, managed a new all-time high on Friday – despite being forced into price cuts on key chips, to keep up with the competition.
The Philly SOX index, which does not include Intel, climbed 3.20% last week. But it does incorporate rival Advanced Micro Devices (AMD), which has raced ahead of Intel. AMD’s share price has risen by an astonishing 133.2% so far this year. AMD is turning to ‘chiplets’ in a bid to counter the slowdown in Moore’s Law. Chiplets are making it easier for ‘modular’ or idiosyncratic designs that boost performance, and reduce power consumption.
Strong employment growth in tech-related services has been a significant contributor to higher incomes: private sector wages & salaries climbed 5.34% y/y in November. The rise in real wages & salaries will continue to drive consumption. PCE was up by a solid
0.28% m/m in November.
