S&P 500 reaches record high as US stocks surge

Tech sector and Federal Reserve interest rates fuel rally for bull market

A trader on the floor at the New York Stock Exchange in New York City on January 19, 2024. Reuters

Wall Street stocks rallied on Friday, boosted by the tech sector, with the S&P 500 and Dow hitting records.

The broad-based S&P 500 advanced 1.2 per cent to close at 4,839.81, surpassing its last all-time high set in 2022.

The session's gains were fuelled by chipmakers surging on AI optimism and investor bets that the Federal Reserve will cut interest rates in 2024.

The benchmark's record high confirms that the S&P 500 ended a bear market when it closed on October 12, 2022, and that it has been in a bull market since then, Reuters reported, according to one measure.

The S&P 500 had lost nearly 25 per cent in a sell-off between its last record high on January 3, 2022 and its low in October 2022.

Also on Friday, the Dow Jones Industrial Average gained 1.1 per cent at 37,863.80, also reaching new heights, while the tech-heavy Nasdaq Composite Index surged 1.7 per cent to end at 15,310.97.

While the Nasdaq recovered 43 per cent lost in 2023, it would need to rise another 4.8 per cent to return to its record high close of 16,057.4437, reached on November 19, 2021.

“The tech stocks are continuing to lead the market higher,” Adam Sarhan of 50 Park Investments told AFP.

“You have explosive action in SMCI, in Nvidia, in Broadcom, in semiconductors in general, and that remains bullish for the market,” he said.

SMCI shares rocketed 35.9 per cent, Nvidia climbed 4.2 per cent and Broadcom added 5.9 per cent.

But Jose Torres of Interactive Brokers said in a note on Friday that the “recent market rally lacks broad participation”.

The latest jump comes after economic data showing that high mortgage rates and limited inventory dragged US existing home sales to the lowest annual level since 1995.

But in an encouraging sign, a University of Michigan gauge showed Americans are becoming more positive about the economy, with consumer sentiment rising 13 per cent in January – the highest level in nearly two and a half years.

“The key takeaway from the report is that the increase in sentiment was accompanied by another drop in year-ahead inflation expectations, which have returned to a level not seen in three years,” a Briefing.com note read.