The Nasdaq Composite surged to a new peak on Friday, surpassing its previous high set in 2021, as investors placed their bets on mega-cap technology stocks as the optimal avenue for navigating decelerating inflation and the impending artificial intelligence surge.
The technology-laden Nasdaq climbed 1.14% to reach 16,274.94, hitting a session peak of 16,302.24. Just a day before, the index had closed at its first record level since November 2021. Meanwhile, the S&P 500 index rose by 0.80% to settle at 5,137.08, marking its inaugural close above the 5,100 mark. The Dow Jones Industrial Average also experienced gains, adding 90.99 points, or 0.23%, to reach 39,087.38.
Nvidia, the semiconductor behemoth that has spearheaded the tech rally with a remarkable surge of over 260% in the past year, continued its upward trajectory with a 4% gain on Friday. Similarly, Meta, formerly known as Facebook, witnessed a more than 2% increase during the trading day.
Weekly, the Nasdaq recorded a gain of 1.74%, while the S&P 500, which had also reached a record high on Thursday, advanced by 0.95%. Both indices secured their seventh positive week out of the last eight. However, the 30-stock Dow remained the underperformer, edging down by 0.11%.
The Nasdaq was the final major U.S. stock benchmark to achieve a record closing this year, reaching the milestone on Thursday. The enthusiasm surrounding AI has propelled mega-cap tech stocks, and consequently the broader market, throughout 2023 and into the current year. The deceleration in inflation, coupled with the Federal Reserve’s anticipated shift towards rate cuts later in 2024, has also played a role in the Nasdaq’s rebound from the challenges of 2022.
“We’re witnessing this significant surge in tech because there’s a significant emphasis on its potential — there’s so much focus on AI and this major resurgence reminiscent of the late 90s,” remarked Jamie Cox, managing partner at Harris Financial Group.
“People now just completely overlook the rest of the market. And that generally does not bode well,” Cox cautioned.
Stocks continued their ascent despite the woes of troubled regional bank New York Community Bancorp, which plummeted by 25.9% following the announcement of a leadership change and the revelation of internal control issues. The bank has already witnessed a decline of over 65% in 2024, sparking concerns among some investors about a broader real estate shakeout on the horizon.
