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S&P 500 Sees Historic Surge; Tech Stocks Lead the Rally
The S&P 500 achieved unprecedented heights on Friday as investors continued to bolster their interests in blue-chip technology equities. This comes in the backdrop of encouraging consumer sentiment data and easing inflation fears. At 2:35 PM ET (7:35 PM GMT), the S&P 500 climbed 1% to 4,830.16, and earlier in the day, it touched a new intraday high of 4,842.19, overpowering the previous record of 4,818.62. The Dow Jones Industrial Average and NASDAQ Composite also witnessed an upward trend, rising 1% and 1.4% respectively.
Major Tech Companies Navigate Market to Record Levels
Big tech firms like Apple, Google, Microsoft, and Meta convened the rally, as investors are increasingly betting on these major technology corporations. Solid expectations about a continued surge in artificial intelligence demand are believed to be fueling this positivity. UBS expressed its fondness for the US information technology sector, attributing this affection to its superior quality inclination and potential benefits anticipated from underlying market demand recovery.
Simultaneously, chip-related equities added to their recent uptick. NVIDIA and AMD observed a rise beyond 3% while Super Micro Computer Inc soared to its record pinnacle, after its full-year forecast adjustment citing robust AI-led demand.
Softening Inflation Forecast and Resilient Consumer Morale Boost Bullish Outlook
The preliminary January survey of consumer sentiment by the University of Michigan exhibited a more positive outcome than expected, hitting 78.8, its highest since July 2021, up from 69.7 in December. Concurrently, expected inflation rates relaxed to 2.9% and 2.8% for one and five years respectively from previous month's 3.1%. This tempering of inflation forecasts, together with steadfast consumer sentiment, helps to control Treasury yields.
Similarly, the probability for a March rate slash has come down to less than half as per Investing.com's Fed Rate Monitor Tool. This along with Congress's recent decision to pass a bill extending the federal funding till March raises the investors' confidence in the economy.
Mixed Response in Corporate Sector; Energy Stocks Reeling Amidst Fluctuating Oil Prices
In the business sector, Macy’s stock price dipped 2.5% following news of anticipated job losses and store closures. E-commerce furniture and home goods merchant Wayfair's stock saw a 9% hike after news of its workforce reduction plan for business revamping. Budget carrier Spirit Airlines' stock soared over 23%, after a positive revision in its Q4 revenue outlook due to heightened holiday travel demand.
Energy equities, however, struggled to maintain minor gains as oil prices fluctuated and ended the day in negative territory. Despite the downward close, oil prices ended the week on a high note, buoyed by optimistic forecasts by the International Energy Agency and OPEC, ongoing geopolitical unrest, and disruptions of oil production in the U.S. due to a winter storm.
