Shares of Microsoft Corporation (NASDAQ: MSFT) set new record highs this week, fuelled by optimism of a new U.S.-Mexico immigration deal and excitement surrounding its forthcoming Xbox gaming console. With the gain, Microsoft has retained its position as the largest U.S. company by market capitalization.

 

Wall Street Extends Recovery

Traders say there’s a nearly 90% chance that the Fed will lower interest rates in July.

Mega-cap technology stocks like Microsoft and Apple Inc. (NASDAQ: AAPL) surged on Monday, leading the U.S. stock market to its highest settlement in over a month. The rally began early last week after Federal Reserve Chairman Jerome Powell gave his clearest signal yet that rate cuts could be on the horizon.

The Fed’s capitulation on monetary policy stems from uncertainty surrounding the U.S.-China trade war and its impact on global economic health. As of Tuesday, traders say there’s a nearly 90% chance that the Fed will lower interest rates in July, according to CME Group’s FedWatch Tool.

The Federal Reserve will hold its next policy meeting on June 18-19 in Washington, but no changes are expected.

Wall Street’s resurgence shifted into higher gear on Monday as investors cheered a new immigration deal between the United States and Mexico. Under the new deal, Mexico will expand border programs to stop the free flow of migrants across its northern border. In exchange, the Trump administration has vowed not to slap tariffs on Mexican imports.

 

Microsoft Stock Hits New Highs

Developments around immigration, trade, and monetary policy helped Microsoft score a new record high on Monday. The MSFT ticker symbol ended New York trading at $132.60, bringing its market cap back above $1 trillion. That capped off a five-day rally for the technology giant, where it gained more than 7%.

Shares of Microsoft Are up More Than 30% Year-to-Date

Microsoft Share Price YTD - Jun 11 2019

Source: Yahoo Finance

Microsoft’s strong performance helped the Dow Jones Industrial Average notch one-month highs. The blue-chip index clawed back above 26,000 after a brutal month of May.

Despite being the largest U.S. company by market cap, Microsoft is ranked 13th by weighting in the Dow Jones Industrial Average. In other words, Microsoft stock ranks 13th in value.

Microsoft has also generated significant buzz around its next-generation Xbox gaming console. Project Scarlett, the code name for the new Xbox, will arrive during the 2020 holiday season and will use AMD chips, the company announced over the weekend. According to MarketWatch, the new console will allow users to stream games from their Xbox One systems to a mobile device.

 

Conclusion

Earlier this year, Microsoft became only the third U.S. company to reach a trillion-dollar market cap. It could be poised to retain that level thanks to a dominant position in the desktop PC market and growing presence in the cloud computing, IT infrastructure, and gaming markets. For those reasons, Microsoft was identified by Zacks as the top Dow stock still holding momentum.

Disclaimer: Author holds no investment position in Microsoft Corporation at the time of writing.