A street sign shows the direction of Wall Street.ANDREW KELLY (Portal)
The S&P 500 index recorded its first all-time high in two years this Friday, thanks to the momentum of chipmakers and other major technology stocks, the result of the optimism generated by artificial intelligence (AI). Speculation about an imminent interest rate cut by the Federal Reserve and the big AI company has sent Wall Street's benchmark index higher, just three weeks after it ended 2023 at a high. Today's closing price confirmed that the S&P 500 has been in a bull market since its closing low on October 12, 2022, according to a metric that also sees that date as the end of a bear market.
The benchmark index topped 4,800 points, defying warnings that the rally remains concentrated in a smaller group of stocks. Stocks rose on Friday as falling Treasury bond volatility continued to bode well for risk appetite on Wall Street, Bloomberg notes. Also helpful was a report seen by many as “Fed-friendly” that showed a combination of increased consumer confidence and lower inflation expectations. That is, the sum of the sustained pace of spending and the apparent control of price increases as part of the so-called soft landing of the economy that would ward off the specter of a recession.
The S&P 500 rose 1.2% this Friday, erasing losses this week. The Nasdaq 100, with a strong technology component, performed better, with Advanced Micro Devices breaking a record and Nvidia, a company leader, leading the rise in megacaps. Big Nvidia shares rose 4.2% and Advanced Micro Devices (AMD) rose more than 7% after server maker Super Micro Computer raised its second-quarter profit forecast, sending its shares up 36%.
Investors traded $31 billion worth of Nvidia shares and $23 billion worth of AMD shares, a larger turnover than any other Wall Street firm, according to LSEG data.
Microsoft and Apple, the world's two most valuable companies, rose more than 1%.
Chipmaker stocks have soared since Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker, said on Wednesday that demand for high-end AI chips is booming.
The 10-year Treasury yield was little changed, while the dollar fell against the basket of benchmark currencies.
From lows in October 2022, the S&P 500 has risen almost 35% and today surpassed its previous closing high of 4,796.56 points. The indicator was the last of the three major U.S. stock benchmarks to close at a record high. As of Thursday, the index had gone 512 days without breaking a record, the sixth-longest streak since 1928, according to Ned Davis Research. A year after hitting new highs, the index has risen 13 of 14 times, with an average gain of 13% this year Period.
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