Wall Street closed out another winning week with a significant milestone as the S&P 500 index achieved its first close above 5,000. The benchmark index rose 0.6%, marking its 14th winning week in the last 15. The Nasdaq composite also performed well, rising 1.2% and edging closer to its all-time high set in late 2021. Big Tech stocks, such as Nvidia, Microsoft, and Amazon, posted substantial gains and played a crucial role in driving the overall market higher.
The Dow Jones Industrial Average, however, lagged behind, dipping 0.1% a day after setting its own all-time high. Despite this slight setback, it was an overall positive week for Wall Street, with the stock market on track for another record and another winning week.
The rally on Wall Street was initially sparked by hopes of cooling inflation leading to the Federal Reserve cutting interest rates. However, the timeline for such rate cuts appears to be delayed as reports continue to show a solid economy. The strength of the economy has raised expectations for company profits, which in turn has supported stock prices.
Cloudflare was one of the standout performers, with its stock soaring 21.2% after reporting stronger-than-expected profits for the latest quarter. Despite a challenging economic environment, the cloud-services company managed to secure its largest new customer and largest renewal ever.
Big Tech stocks continued to carry the market, driven by the ongoing excitement surrounding artificial intelligence technology. Nvidia, Microsoft, and Amazon all saw their stock prices rise by at least 1.4%, contributing significantly to the gains in the S&P 500.
However, not all companies fared as well. PepsiCo experienced a 2.9% drop in its stock price after reporting weaker revenue for the latest quarter than analysts had anticipated. The company attributed the slower growth to customers returning to their pre-pandemic snacking and consumption habits.
Expedia also struggled, with its stock tumbling 17.8% despite reporting stronger-than-expected profits. Analysts pointed to some concerning forecasts for the first quarter of 2024, which suggested slower bookings growth. The company also announced a new CEO, Ariane Gorin, who will assume the role in May.
Take-Two Interactive, the publisher of popular video games such as Grand Theft Auto, saw its stock price decline by 8.1% after reporting weaker-than-expected profits and cutting its forecast for the fiscal year.
Overall, the reporting season has been positive for S&P 500 companies, with profits generally exceeding expectations. This trend has boosted optimism on Wall Street, although some contrarians warn that stock prices may have become too expensive.
In the bond market, Treasury yields experienced slight increases but remained relatively calm compared to earlier in the month. Traders pushed out their forecasts for rate cuts, causing significant volatility. The yield on the 10-year Treasury rose to 4.16% from 4.15% late Thursday, a notable change from the 3.85% earlier in the month.
The fact that the stock market continues to reach new highs despite reduced expectations of imminent interest rate cuts is seen as an encouraging signal. It suggests that the market is becoming less emotional and more stable, although investors must remain vigilant and avoid complacency during this strong and steady bull run.
In international stock markets, indexes were mostly lower and relatively quiet. Several Asian markets were closed for the Lunar New Year holiday. Tokyo’s Nikkei 225 edged up by 0.1%, reaching a 34-year high earlier in the day.
Overall, Wall Street’s winning week was fueled by optimism surrounding company profits and supported by the strong performance of Big Tech stocks. The achievement of the S&P 500’s first close above 5,000 is a significant milestone and further solidifies the positive sentiment in the stock market. Investors will continue to closely monitor economic data and corporate earnings as they navigate the challenging and ever-changing investment landscape.
