Technology stocks drove the S&P 500 past another milestone and to a fresh record on Friday, with the broad index closing above 5000 points for the first time.
The rally reflects unexpected strength in the economy that has investors believing that as long as the expansion continues, they can ride riskier assets to gains even if interest rates remain high.
The tech-heavy Nasdaq Composite Index added 1.2% on Friday, bringing its rise to 6.5% so far this year. The Dow Jones Industrial Average shed 0.1%, or about 55 points, Friday yet remains up 2.6% year-to-date. The S&P 500 ended the week 1.4% higher at about 5027 following a climb of 0.6% Friday. The index has risen 5.4% in 2024.
Each of those indexes have risen during 14 of the past 15 weeks. The S&P 500 hasn’t had a run like that since a stretch that ended in March 1972. The last time the Dow and Nasdaq did was in the 1990s.
Investors have been anxious about recession since the Federal Reserve raised interest rates to their highest level in decades in an effort to tame inflation. But a blockbuster jobs report last week showed persistent strength in the labor market and corporate earnings have continued to grow even after inflation has cooled and weakened the pricing power of many companies.
“We bleed upwards without any reason to go down,” said Matthew Tuttle, chief executive officer of Tuttle Capital Management.
Next week, investors will get a fresh read on inflation when the latest consumer price data is published on Tuesday. Retail sales data is due Thursday and supplier prices will be gauged anew on Friday. Companies including Coca-Cola, Zillow, Waste Management and Marriott International are scheduled to report quarterly earnings.
“We’re all waiting for something bad to happen and nothing bad is happening,” said John Augustine, chief investment officer at Huntington Private Bank.
He said his Ohio firm is taking profits from bonds it bought last year and reinvesting in stocks before the Fed’s meeting that begins March 19. If the central bank signals that rate cuts are coming, there could be a flood of cash that has piled up in money-market accounts for their 5% yields flowing into stocks.
“No one has ever reached their financial goals investing in cash. Eventually it’s coming out,” Augustine said. “We’re trying to get our clients ahead of that.”
Randy Watsek, a New York financial adviser with Birch Lane Group of Raymond James, said that because of solid earnings growth, he is finding plenty of attractive stocks for long-term investors despite the run up in share prices.
“When I look at individual stocks, I am not having a problem finding ones I think are appealing from a value perspective,” he said.
On Friday, it was high-price shares of big technology stocks that carried the overall market higher. Applied Materials, which supplies semiconductor chip manufacturers, was one of the S&P 500’s top gainers, up 6.9%.
Chip maker Nvidia increased 3.6% while Google parent Alphabet and Amazon.com each rose more than 2%. Microsoft added 1.6%, pushing its market capitalization to $3.125 trillion, setting a new record for America’s most valuable public company ever, topping the mark set by Apple last summer.
Those gains offset losses such as those suffered by Expedia Group shares. The travel-booking firm tumbled 18% after it said it would replace its CEO and that its earnings faced a headwind from airfares that have declined from the postpandemic highs. PepsiCo dropped 3.6% after its quarterly sales disappointed investors and despite plans to boost its dividend by 7%.
Building materials maker Owens Corning fell 7.1% after it said it would buy doormaker Masonite International for $3.9 billion. The seller’s stock jumped 35% toward the purchase price.
Owens said it would borrow about $3 billion of the purchase price, a sign that both buyers and sellers in the mergers and acquisitions market have adjusted to higher borrowing costs.
The yield on the 10-year U.S. Treasury note inched up to 4.186% Friday, from 4.169% on Thursday and below 4% at the start of the year.
Chris Giamo, head of commercial banking at TD Bank, said the small to midsize businesses that his team advises are beginning to ponder big expenses like new leases, property purchases, mergers and acquisitions now that borrowing costs seem to have plateaued.
“If rates start to come down, people who had put off activity like that may say, when’s the time to jump in and start to reconsider any type of expansion,” he said.
In commodity markets, crude-oil prices rose Friday for the fifth consecutive day. Benchmark U.S. crude futures rose $4.56 a barrel this week to end at $76.84 a barrel. Meanwhile, natural-gas prices continued their early decline into spring. March futures settled at $1.847 per million British thermal units, a new three-year low and 27% lower than a year ago.
Overseas stocks were mixed Friday. Europe’s main stock indexes were mostly lower. Japan’s Nikkei 225 ended slightly higher while Hong Kong’s Hang Seng Index fell 0.8% in an abbreviated session for the Lunar New Year break. Mainland Chinese markets were closed.
Write to Ryan Dezember at [email protected]
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