Topline
The tech-heavy Nasdaq hit a 14-month high Friday, largely driven by massive gains from a handful of the widely tracked tech index’s largest companies, while the Dow Jones Industrial Average and S&P 500 each hit key milestones of their own as optimism is aplenty on Wall Street.
Key Facts
The Nasdaq Composite closed at its highest level since April 21, 2022, wiping out what was once as steep as a 40% loss last year as investors dumped rate-sensitive tech stocks while the Federal Reserve hiked interest rates to their highest level since the mid-2000s.
But largely resilient earnings and unfettered optimism about what artificial intelligence could mean for future bottom lines helped the Nasdaq surge 27% so far this year, far outpacing the S&P 500 and the Dow Jones industrial average’s 12% and 2% year-to-date gains, respectively.
Buoying the Nasdaq’s recovery are the mega-cap companies largely generating the biggest AI buzz; chipmakers Nvidia and AMD and generative AI leaders Alphabet and Microsoft are each up more than 40% year-to-date.
The Nasdaq’s milestone Friday came amid a strong day overall for stocks, as the S&P and Dow each gained more than 1% after government data revealed a strong labor market.
In fact, the Dow’s 700-point gain marks its best day since January 6.
The S&P’s closing price of 4,283 is its highest since last August, though it remains about 10% below its peak achieved in 2022.
Big Number
Nearly $4 trillion. That’s how much market cap the seven biggest companies listed on the Nasdaq (Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta) have gained in 2023.
Surprising Fact
The S&P is now at the same level it closed at March 22, 2022, the first rate increase of the current Fed hiking cycle, noted Bespoke Investment Group.
Tangent
The CBOE VIX Index, a volatility metric, which acts as a “fear gauge” for Wall Street, sank nearly 6% Friday to its lowest level since February 2020, shortly before pandemic lockdowns.
Key Background
The U.S. economy “is not showing strong signs” that a recession will come this year, Oanda analyst Ed Moya declared Friday, saying steady output and consumer spending is “short-term good news for the stock market.” The Nasdaq is coming off of its worst year since 2008 after it crashed 33%, losses that far outpaced the Dow’s and S&P’s. Fueling the tech investor fire was the November release of the viral, Microsoft-backed ChatGPT AI chatbot, which led to a spike in investments in generative AI developments and the hardware powering the technology.
Nvidia Hits $1 Trillion Market Value (Forbes)
These 7 Tech Stocks Command Almost 90% Of The S&P 500’s Gains—Signaling Market Rally May Not Be So Healthy (Forbes)
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