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S&P 500 notches first record high close in 2 years; chipmakers soar

Published 01/19/2024, 06:28 AM
Updated 01/19/2024, 07:21 PM
© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 13, 2023.  REUTERS/Brendan McDermid/File Photo

By Noel Randewich and Johann M Cherian

(Reuters) -The S&P 500 posted a record high close on Friday for the first time in two years, fueled by a rally in chipmakers and other heavyweight technology stocks on optimism around artificial intelligence.

The benchmark's close confirmed that the S&P 500 has been in a bull market since it closed at its low on Oct. 12, 2022, according to one measure which also puts that date as the end of a bear market.

In a selloff between its record high close of 4,796.56 on Jan. 3, 2022 and its low in October 2022, the S&P 500 tumbled 25%.

On Friday, the S&P 500 jumped 1.23% to end the session at 4,839.81 points.

"It really is an encouraging day in terms of the action, and 4,800 certainly has been a key level which has been difficult to surmount. So if we continue to move in this direction, that's going to be a very positive sentiment sign," said Lisa Erickson, head of public markets at U.S. Bank Wealth Management in Minneapolis.

Nvidia (NASDAQ:NVDA) climbed 4.2% and Advanced Micro Devices (NASDAQ:AMD) rallied over 7% after server maker Super Micro Computer (NASDAQ:SMCI) lifted its second-quarter profit forecast, sending its shares soaring 36%.

Investors exchanged $31 billion worth of Nvidia's stock and $23 billion worth of AMD shares, higher turnover than any other company on Wall Street, according to LSEG data.

The Philadelphia SE Semiconductor index soared 4% to a record high, while the S&P 500 information technology sector index jumped more than 2% to a record highs.

Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL), the world's two most valuable companies, both rose more than 1%.

Chipmaker stocks have gained since Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker, on Wednesday said it saw booming demand for high-end chips used in AI.

The Nasdaq jumped 1.70% to 15,310.97 points, while Dow Jones Industrial Average rose 1.05% to 37,863.80 points.

Volume on U.S. exchanges was heavy, with 12.3 billion shares traded, compared to an average of 11.5 billion shares over the previous 20 sessions.

After surging through December, Wall Street treaded water in recent weeks as investors reined in expectations the Federal Reserve would start cutting interest rates as soon as March.

Interest rate traders now see a 52% chance of a March rate cut, according to the CME Group's (NASDAQ:CME) FedWatch Tool.

Stock investors were also cheered on Friday by the University of Michigan's preliminary survey showing consumer sentiment improved in January to its highest level since the summer of 2021.

The S&P 500 could lose steam if companies reporting quarterly results over the next few weeks fail to justify relatively high valuations. Netflix (NASDAQ:NFLX) reports on Tuesday, followed by Tesla (NASDAQ:TSLA) on Wednesday.

"This new record level of the S&P 500 is sustainable as long as earnings meet expectations," said Steve Sosnick, Chief Strategist at Interactive Brokers (NASDAQ:IBKR).

"If, on the other hand, we find out that the market has either gotten ahead of itself ... or we get guidance from some of these companies that doesn't match the bullish sentiment that's being priced into them, that can be a real risk.”

Travelers (NYSE:TRV) Cos jumped 6.7% after the insurer's fourth-quarter profit more than doubled, while State Street (NYSE:STT) advanced 2.1% after the lender reported record net inflows in its Global Advisors unit in the fourth quarter.

Spirit Airlines (NYSE:SAVE) rebounded 17% from losses earlier this week as it assessed options to refinance its 2025 debt maturities amid concerns over the airline's ability to remain afloat.

iRobot (NASDAQ:IRBT) slumped almost 27% after a report said the European Union's competition watchdog plans to block (NASDAQ:AMZN)'s $1.4-billion acquisition of the robot vacuum maker.

© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 13, 2023.  REUTERS/Brendan McDermid/File Photo

Advancing issues outnumbered falling ones within the S&P 500 by a 2.9-to-one ratio.

The S&P 500 posted 60 new highs and 3 new lows; the Nasdaq recorded 97 new highs and 191 new lows.

Latest comments

And see my response to JCH007
I'm not sure you all understand the basics of the stock market. See below. The Stock Market and the Economy are not the same thing. Also there is a time differential---if you try to predict very short term moves(days, weeks, even a couple months vs longer trends)( ie.the little jig-jags within broader trends, longer trends)
Yup.  Too many confuse Wall St. w/ Main St.
AI...what about the rest of America? No news on wrecked rate cut hopes? Seems diminishing rate cut hopes are now great for stocks too?
does not matter anymore. we've got ai to save the world and aolve all our problems
Market is completely disconnected from reality. Investors don't move markets, machines do.
Yes...and the fraud is real. The entire system is purposely and precisely designed to be controlled and manipulated.
Investors move markets. Machinery moves economies. Also, the stock market is predictive. Usually anticipates by 6-9 months. Is imperfect. Over-predicted rate cuts, or some people did, then has corrected some. The herd got a little too excited. Probably.
Irrational enthusiasm
NVDA stock currently has a market valuation of nearly $1.5 trillion, $1 trillion of which was just added in the past 12 months. The currently P/E is above 77, which means that 77 years of earnings are factored into the current price. The valuation is so high that NVDA stock gains $25 million worth of valuation for every penny that it goes up. Today NVDA is up $24, which equates to $60 billion of added valuation in just 1 trading day.
Two fantastic posts Dylan.
Doe market makers see the amount of the retails investors accounts margin % on various brokers with which they are working with as liquidity provider !? As stop loss hunting is the main logic of the markets,knowing that some accounts are near to be liquidated should be a very good information to have, right ?
Most retail investors are buy-&-hold w/ no margin debt.
NVDA went up 200% last year, gaining almost $1 trillion in market cap in just 12 months. Nany Pelosi bought $5 million worth of NVDA calls in December 2023 (just 1 month ago). NVDA is up 20% in just the first 2 weeks of 2024. Of note, NVDA released new shortly after Pelosi's purchase that revealed that NVDA would be supplying AI chips to the Chinese government, a decision that would have required approval from US government intelligence first.
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