S&P 500, Nasdaq Jointly Hit New All-Time Highs As AI-Driven Stocks Defy Gravity: What's Driving Markets Friday?

The S&P 500 index, up 0.7%, hit 4,819 points at 1:13 p.m. ET in New York, breaking the prior record highs of two years ago. Bulls are back in control of Wall Street, with technology stocks also extending all-time highs, driven by companies linked to artificial intelligence growth.

The tech-heavy Nasdaq 100 has surpassed the 17,000-point mark, on track to close its eleventh positive week in the last 12. Shares of chipmakers continue to outperform, with the VanEck Semiconductor ETF SMH up more than 7% for the week, on track for its best performance since late October.

Dow Jones blue chips are up 0.6%, while Russell 2000 small caps are flat.

On the macroeconomic front, Friday saw a robust consumer confidence report, with the University of Michigan’s gauge significantly surpassing expectations in January, reaching the highest level since July 2021.

Traders have scaled back expectations of a Fed rate cut in March due to stronger-than-expected economic data this week. Fed futures ar pricing in only a 50% likelihood of a Fed rate cut in March, down from over 70% last week. This failed to trigger bearish reactions in the stock market.

On the Fed front, Friday witnessed two “dovish-leaning” officials opening the door to rate cuts, somewhat contradicting earlier remarks this week. Atlanta Fed President Raphael Bostic said he is open to changing his outlook on the timing of rate cuts. Chicago Fed President Austan Goolsbee emphasized that as inflation continues to decline, it creates opportunities for nominal rate cuts.

Treasury yields are grinding higher for shorter-dated, more policy-sensitive maturities. The two-year yield rose 6 basis points to 4.42%, up by 26 basis points this week

Friday’s Performance In US Major Indices, ETFs

The SPDR S&P 500 ETF Trust SPY rose 0.7% to $480, the SPDR Dow Jones Industrial Average DIA rose 0.6% to $377.00 and the tech-heavy Invesco QQQ Trust QQQ was trading 1.3% higher to $418.40, according to Benzinga Pro data.

Sector-wise, the Technology Select Sector Fund XLK continued to outperform, up 1.6%, followed by the Financials Select Sector Fund XLF.

The Utilities Select Sector Fund XLU was the laggard, down 0.6%.

Chart Of The Day: S&P 500 Index Hits All-Time Highs

Friday’s Stock Movers

• Paypal Holdings Inc. PYPL led gains on the Nasdaq 100, up 5.2%.
• Shares of chipmakers Broadcom Inc. AVGO, QUALCOMM Incorporated QCOM, Texas Instruments Incorporated TXN and Lam Research Corporation LRCX, all witnessed increases between 4% and 5%.
• Ally Financial Inc. ALLY rose over 10% in reaction to upbeat financial results.
• Wayfair W rose over 8% after the online retailer announced layoffs affecting 13% of its workforce.
• Celsius Holdings Inc. CELH tumbled nearly 12% as Bank of America released a bearish note, downgrading the stock from Overweight to Neutral.

Read now: AI Stocks Dominate In January: Nvidia, Juniper, Palo Alto Lead The Charge

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