The US stock market reached new highs on Friday, with both the Dow Jones Industrial Average and S&P 500 hitting all-time records. The surge was driven by strong performances from tech giants and positive economic indicators.
Tech Stocks Lead the Charge
One of the key factors contributing to the market’s surge was the impressive performance of Netflix. The streaming giant’s stock price jumped by 11.1% after reporting subscriber growth that exceeded analysts’ expectations. This boost helped the communication services sector gain 0.9% for the day.
Apple and Nvidia also played significant roles in driving the market higher. Apple’s shares rose by 1.2% due to strong sales of its iPhone in China, while Nvidia’s stock climbed 0.8% following an upward revision to its price target.
Dow Holds Steady Despite American Express Decline
While the Dow Jones Industrial Average was slightly weighed down by a decline in American Express shares, overall market sentiment remained positive. The information technology sector, which has been a major driver of the broader market rally, gained 0.5% for the day.
Valuation Concerns Loom Over S&P 500
Though concerns persist about the S&P 500’s valuation nearing 22 times forward earnings, strong corporate earnings reports have helped to calm fears of volatility, especially with the upcoming election on the horizon.
Weekly Performance Recap
For the week:
- S&P 500: +0.9%
- Nasdaq Composite: +0.8%
- Dow Jones: +1.0%
Friday’s Closing Levels:
| Index | Close | Change | % Change |
| Dow Jones | 43,275.91 | +36.86 | +0.09% |
| S&P 500 | 5,864.67 | +23.20 | +0.40% |
| Nasdaq Comp | 18,489.55 | +115.94 | +0.63% |
| US 10-Year | 4.083% | ||
| VIX | 18.03 | -1.08 | -5.65% |
Semiconductor Sector Sees Volatility
The technology sector experienced a turbulent week, particularly in the semiconductor space. On Tuesday, ASML, a Dutch supplier of chipmaking equipment, sent shockwaves through the industry when it reported lower-than-expected quarterly bookings. This news triggered a dip in chip stocks, casting a shadow over the sector.
However, sentiment quickly shifted on Thursday after Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chipmaker, announced stellar quarterly earnings. Strong demand for artificial intelligence (AI) chips fueled TSMC’s success, reigniting investor enthusiasm in the semiconductor sector.
TSMC’s Strong Results Keep Bulls in Charge
TSMC’s results likely prevented a broader market selloff, giving bulls the confidence to drive the market even higher.
How Long Can the Rally Last?
The ongoing rally, especially in tech stocks, has many bulls believing there’s no stopping it. The market’s ability to continually make new highs strengthens this view. However, the more confident the market becomes, the more vulnerable it is to unexpected downturns.
As the rally stretches on without a significant pullback, investors may begin to wonder: How long can this momentum last before we see a correction?
Source: CBOE, Bloomberg
This commentary is written by James Gomes, a seasoned finance industry veteran with extensive experience of over 30 years, including a substantial tenure at a reputable US bank exceeding 20 years.
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