Stock Market Update: Record High Closes for Nasdaq and S&P 500

The Nasdaq and S&P 500 indices have reached new heights, closing at record highs on Wednesday. This milestone was achieved due to the impressive performance of tech giants like Nvidia, Apple, and other Wall Street heavyweights. The Nasdaq has now recorded seven consecutive record-high closes, while the S&P 500 has achieved this feat for the sixth time in a row.

The S&P 500 crossed the 5,600 mark for the first time, following Federal Reserve Chair Jerome Powell’s comments on interest rates. Powell expressed some confidence that inflation is moving in the right direction, but noted that it is not yet sustainable. This sentiment boost led to a surge in the Philadelphia semiconductor index, which reached a record high after Taiwan Semiconductor Manufacturing Co reported strong quarterly revenue.

Nvidia, Micron Technology, and Advanced Micro Devices were among the top performers, with gains of 2.7%, 4%, and 3.9%, respectively. Apple’s stock price also reached a new high, pushing its market value to $3.6 trillion. These gains were driven by the “AI narrative” supported by TSMC’s report, according to Thomas Martin, senior portfolio manager at Globalt Investments.

The S&P 500 index rose 1.02% to close at 5,633.91 points, while the Nasdaq gained 1.18% to 18,647.45 points. The Dow Jones Industrial Average also rose 1.09% to 39,721.36 points. The S&P 500 has now gained 18% in 2024, with the Nasdaq up 24%.

All 11 S&P 500 sector indexes recorded gains, led by information technology and materials. However, some investors are concerned about a potential selloff if the earnings of these large-cap stocks fail to meet high expectations. The S&P 500 has a significant weighting of these stocks, which could impact the market if their performance is disappointing.

The week ahead will bring important data on inflation, including the Consumer Price Index on Thursday and the Producer Price Index report on Friday. Expectations of a 25-basis-point rate cut by September have increased to 74%, up from 70% on Tuesday and 45% a month ago.

The upcoming earnings season, which begins this week, will test whether these high-flying megacaps can justify their expensive valuations and continue their strong runs. Intuit, a TurboTax owner, dropped 2.6% after announcing plans to lay off about 10% of its workforce. On a positive note, Illumina, a gene-sequencing equipment maker, jumped over 6% after acquiring privately held Fluent BioSciences.

The S&P 500 saw 33 new highs and 11 new lows, while the Nasdaq recorded 65 new highs and 117 new lows. Advancing issues outnumbered falling ones by a 4.3-to-one ratio.

Historical Context:

The current stock market update is significant because it marks a new milestone in the ongoing recovery of the global economy from the COVID-19 pandemic. The record highs achieved by the Nasdaq and S&P 500 indices are a testament to the resilience and adaptability of the financial markets. The performance of tech giants like Nvidia, Apple, and other Wall Street heavyweights is a reflection of the growing importance of technology and innovation in the modern economy.

The Federal Reserve’s comments on interest rates and inflation also play a crucial role in shaping the market’s sentiment. The Fed’s willingness to maintain a accommodative monetary policy has contributed to the current bull run, as it has kept borrowing costs low and encouraged investors to take on more risk.

The “AI narrative” mentioned in the article refers to the growing importance of artificial intelligence in various industries, including technology, healthcare, and finance. The report by Taiwan Semiconductor Manufacturing Co (TSMC) on strong quarterly revenue has boosted investor confidence in the sector, leading to gains in stocks like Nvidia, Micron Technology, and Advanced Micro Devices.

Summary in Bullet Points:

• The Nasdaq and S&P 500 indices reached record highs on Wednesday, with the S&P 500 crossing the 5,600 mark for the first time. • The gains were driven by the performance of tech giants like Nvidia, Apple, and other Wall Street heavyweights. • The S&P 500 rose 1.02% to close at 5,633.91 points, while the Nasdaq gained 1.18% to 18,647.45 points. • The Dow Jones Industrial Average also rose 1.09% to 39,721.36 points. • The S&P 500 has now gained 18% in 2024, with the Nasdaq up 24%. • All 11 S&P 500 sector indexes recorded gains, led by information technology and materials. • Investors are concerned about a potential selloff if the earnings of large-cap stocks fail to meet high expectations. • The upcoming earnings season will test whether these high-flying megacaps can justify their expensive valuations and continue their strong runs. • The S&P 500 saw 33 new highs and 11 new lows, while the Nasdaq recorded 65 new highs and 117 new lows. • Advancing issues outnumbered falling ones by a 4.3-to-one ratio. • The week ahead will bring important data on inflation, including the Consumer Price Index on Thursday and the Producer Price Index report on Friday. • Expectations of a 25-basis-point rate cut by September have increased to 74%, up from 70% on Tuesday and 45% a month ago.