U.S. equities demonstrated upward momentum on Friday, positioning the S&P 500 index to potentially achieve its first record closing high in two years, according to data.
In terms of individual stock performance:
The positive trajectory in the stock market on Friday followed notable gains on Thursday, where the S&P 500 rose by 41.73 points (0.9%) to close at 4,780.94. Simultaneously, the Dow industrials recorded an increase of 201.94 points (0.5%), concluding at 37,468.61 and putting an end to a three-day losing streak. The Nasdaq Composite surged by 200.03 points, nearly 1.4%, to reach 15,055.65.
The impetus for this market movement can be attributed to the S&P 500 finishing Thursday's session within 0.3% of its previous record closing high of 4,796.56 from January 3, 2022. Notably, technology stocks played a pivotal role in propelling the market forward once again on Friday, continuing their trend of outperformance.
The Magnificent Seven group of mega-cap technology stocks, alongside a few others, contributed to the surge in the tech-heavy Nasdaq-100 index, setting it on course for a consecutive record close on Friday. The Invesco QQQ Trust Series 1 (QQQ), an exchange-traded fund (ETF) tracking the Nasdaq-100, was observed trading above $415, according to FactSet data.
Driving the Nasdaq's ascent were notable gains from chipmakers such as Nvidia Corp. (NVDA) and Broadcom Inc. (AVGO). This surge was fueled by positive signs indicating increased strength in the semiconductor space. Better-than-expected results from Taiwan Semiconductor Manufacturing Co. (TSM) on Thursday played a significant role in boosting the Nasdaq Composite. The semiconductor sector continued to receive a boost on Friday following optimistic sales guidance from Super Micro Computer Inc. (SMCI).
Peter Cardillo, Chief Market Economist at Spartan Capital Securities, observed the Nasdaq leading the market rally, expressing optimism that the upward momentum might have longevity if corporate earnings meet expectations and guidance aligns with projections.
In terms of economic data on Friday, the preliminary reading of the University of Michigan's consumer sentiment gauge for January showed a notable improvement, surging to 78.8 from December's 69.7. This marked the highest reading since July 2021. Additionally, existing-home sales for December were roughly in line with expectations, experiencing a 1% decline to 3.78 million homes sold.
As markets entered 2024 with expectations of six or seven interest-rate cuts by the Federal Reserve, recent strong economic data, including retail sales figures, has led to a reassessment of these expectations. Despite the positive market sentiment, Treasury yields experienced an uptick since the market opened on Friday, potentially tempering stock gains. The 10-year note yield rose by 4 basis points to 4.18%, according to FactSet data.
Federal Reserve officials, including Chicago Fed President Austan Goolsbee, provided insights on Friday. Goolsbee, in an interview on CNBC, declined to specify when the Fed might commence interest-rate cuts but suggested that reductions could be anticipated this year if there is continued progress in managing inflation. Fed Vice Chair for Supervision Michael Barr and San Francisco Fed President Mary Daly were also scheduled to speak later in the day.
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