Dell surged after raising its full-year profit and revenue forecasts on Thursday, driving a rally in the tech sector. The gains were fueled by strong performances in chip stocks and peers like Hewlett Packard Enterprise and Super Micro Computer, with Microsoft also climbing.
Earlier in the session, all three major indexes hit intraday record highs, buoyed by renewed optimism around AI and robust earnings growth, despite concerns about the Iran war's impact on inflation and the global economy.
According to preliminary data, the S&P 500 gained 16.11 points, or 0.21%, to end at 7,579.74 points, while the Nasdaq Composite gained 53.74 points, or 0.20%, to 26,971.21. The Dow Jones Industrial Average rose 363.48 points, or 0.72%, to 51,032.45.
“There's definitely euphoric sentiment in the market around AI. The rally has really been driven by earnings.”
Ohsung Kwon, Chief Equity Strategist at Wells Fargo
The S&P 500 communications services sector dropped, as Alphabet declined. Consumer staples shares were weak with heavyweights Costco and Walmart both down.
The S&P automaker index dropped after reports the Trump administration wants North American-built vehicles to have 82% regional content to qualify for preferential treatment under the U.S.-Mexico-Canada Agreement. Shares of General Motors and U.S.-listed shares of Stellantis fell.
“Over the past few weeks volume has gone up, which suggests more people are coming into the market.”
Melissa Brown, Head of Investment Decision Research at SimCorp
U.S. economic data on Thursday showed inflation increased at its fastest pace in three years in April, while GDP for the first quarter was revised lower to a 1.6% annual rise. The Fed's Kansas City President Jeffrey Schmid warned the energy shock may not be temporary. Vice Chair for Supervision Michelle Bowman said a persistent rise in inflation might require tighter monetary policy.
Background
The tech sector has been a significant driver of market growth, with AI developments and strong earnings reports boosting investor confidence. However, inflation concerns and geopolitical tensions, such as the Iran war, continue to pose risks to the global economy.
Investors will be closely monitoring Federal Reserve policies and inflation trends, as well as ongoing geopolitical developments, to gauge the future direction of the market. The tech sector's performance, particularly in AI, remains a key area of interest.
