US stocks surged to new record highs on Thursday, driven by strong performances in the tech sector and renewed optimism around artificial intelligence. Dell led the charge by raising its full-year profit and revenue forecasts, boosting investor confidence.
The tech sector saw significant gains, with chip stocks and peers like Hewlett Packard Enterprise and Super Micro Computer experiencing upward momentum. Microsoft also climbed, contributing to the overall positive sentiment. The software services index advanced, further underscoring the sector's strength.
Earlier in the session, all three major indexes reached intraday record highs. The S&P 500 gained 16.11 points, or 0.21%, to close at 7,579.74 points. The Nasdaq Composite rose by 53.74 points, or 0.20%, ending at 26,971.21, while the Dow Jones Industrial Average increased by 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 rally was largely earnings-driven, as noted by Ohsung Kwon, chief equity strategist at Wells Fargo, who highlighted the market's euphoric sentiment around AI. Melissa Brown from SimCorp observed an increase in trading volume, indicating more market participation.
Despite the positive market movements, some sectors faced challenges. The S&P 500 communications services sector dropped due to Alphabet's decline, and consumer staples were weak with Costco and Walmart both down. Additionally, the S&P automaker index fell following reports of potential changes in the U.S.-Mexico-Canada Agreement.
“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
US economic data revealed a rapid inflation increase in April, the fastest in three years, and a downward revision of GDP growth for the first quarter to 1.6% annually. Federal Reserve officials expressed concerns about potential long-term inflationary pressures.
Background
The S&P 500 is on track for its ninth consecutive weekly gain, the longest streak since December 2023. This reflects the market's resilience amid global economic uncertainties and inflation concerns.
Investors are advised to monitor Federal Reserve actions, particularly the anticipated interest rate decisions later this year.
