Wall Street's main indexes continued their upward trajectory on Friday, driven by strong performances in tech stocks, as investors remained attentive to potential developments in a U.S.-Iran deal. All three major indexes were poised for weekly and monthly gains, with the Dow Jones up 0.62%, S&P 500 rising 0.24%, and Nasdaq increasing 0.23% by the afternoon.
Dell Technologies led the charge in the tech sector, surging 28% after it raised its full-year profit and revenue forecasts. The tech sector overall climbed 1.83%, buoyed by gains in chip stocks and significant increases in shares of Hewlett Packard Enterprise and Super Micro Computer, which rose 12% and 10%, respectively. Among the megacaps, Microsoft saw a 3% rise.
The S&P 500 tech index reached an all-time high, reflecting renewed optimism around artificial intelligence and robust earnings growth, despite ongoing concerns about the potential impact of the Iran conflict on inflation and the global economy. Meanwhile, the S&P 500 communications services sector fell 1.7%, with Alphabet dropping 1.8%.
“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
Consumer staples were weak, with Costco and Walmart declining 4.5% and 2.8%, respectively. The S&P automaker index also fell 0.8% following reports that the Trump administration seeks higher regional content requirements for North American-built vehicles under the U.S.-Mexico-Canada Agreement.
In the broader market, the small-cap Russell 2000 index was down 0.6%. Economic data showed inflation rising at its fastest pace in three years in April, while GDP growth for the first quarter was revised lower to a 1.6% annual rate. Federal Reserve officials expressed concerns over the potential persistence of inflation, with money markets anticipating a steady interest rate for the remainder of the year.
Background
The recent rally in Wall Street's indexes comes amid a backdrop of strong corporate earnings and heightened interest in artificial intelligence, which have helped offset concerns about geopolitical tensions and inflation. The tech sector's performance has been a significant driver of market gains, reflecting investor confidence in the sector's growth potential.
Looking ahead, investors will be closely monitoring any announcements regarding the U.S.-Iran deal, as well as ongoing economic indicators that could influence Federal Reserve policy decisions. The tech sector's performance and AI developments remain key areas of focus.
