Investor enthusiasm remained particularly high for major tech firms like Alphabet, Google’s parent company, and Amazon, propelling the Nasdaq upward as well.
Adam Sarhan of 50 Park Investments highlighted the current market dynamics, saying, “This is an environment that emphasizes the importance of following the leaders.” He further elaborated, “When you look at the leading stocks in Wall Street, clearly you can see technology continues to lead time and time again.”
The S&P 500 concluded the day at 5,026.61, marking a 0.6 percent increase and recording its 10th record close of the year. Meanwhile, the Nasdaq Composite Index saw a 1.3 percent rise to 15,990.66, but the Dow Jones Industrial Average experienced a slight decline of 0.1 percent, settling at 38,671.69.
The upward trend in stocks has been evident since late October, following the Federal Reserve’s shift away from steep interest rate hikes as inflation began to subside. The anticipation is building for the next consumer price index (CPI) update, especially after December’s figures were revised downwards.
In the corporate sphere, Expedia’s shares took a hit, dropping 17.8 percent after the company reported earnings that fell short of the previous year’s performance. Ariane Gorin has been appointed as the new CEO, taking over from Peter Kern, who will remain as vice chairman.
The surge in megacap stocks has been instrumental in propelling the S&P 500 past the 5,000-point threshold for the first time. This rally is part of a broader trend that has seen the Nasdaq briefly surpass the 16,000 mark, driven by significant gains in megacaps and semiconductor stocks, including Nvidia, which has seen increased interest due to its involvement in artificial intelligence (AI) technology and strong earnings reports.
Nvidia’s stock climbed 3.6 percent, reaching a new high following reports of its expansion into a new business unit dedicated to custom chip design for cloud computing and AI applications. This move comes amid broader industry discussions about enhancing chip production capabilities to support AI advancements.
David Lefkowitz of UBS Global Wealth Management commented on the AI sector’s growth, noting the substantial demand for AI infrastructure. While the S&P and Nasdaq’s milestones may not alter investor risk-reward calculations significantly, they do highlight the market’s current dynamics.
The performance of technology giants like Microsoft, Amazon, and Alphabet has also contributed to the market’s gains. With approximately two-thirds of S&P 500 companies having reported, earnings growth for the fourth quarter is now estimated at 9.0 percent, surpassing initial expectations.
Tim Ghriskey of Ingalls & Snyder in New York remarked on the strong earnings and the potential growth opportunities for Nvidia in cloud computing and AI as key market drivers.
As the market anticipates further data on consumer prices, the focus remains on the Federal Reserve’s interest rate decisions. Despite recent strong economic data and Fed officials’ hawkish statements, there’s speculation about potential rate cuts later in the year.
The week concluded with all three major indexes securing their fifth consecutive weekly gain, underscoring the market’s positive trajectory amidst ongoing economic and corporate developments.
(With inputs from agencies)