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S&P 500 trades in record territory as tech leads U.S. stocks higher

U.S. stocks were pushing higher on Friday afternoon, with the S&P 500 attempting its first record closing high in a bit more than two years.

For the week, all three indexes are on track for gains, according to FactSet data, at last check.

What’s driving markets

U.S. stocks were rising sharply on Friday afternoon, with the S&P 500 index on course for a potential record high as technology stock lead the way higher.

The S&P 500 ended Thursday just 0.3% below its all-time closing peak of 4,796.56, reached Jan. 3, 2022, according to Dow Jones Market Data. On Friday, the index traded above its previous record intraday high of 4,818.62 that it hit on Jan. 4, 2022.

Stock-market investors are still “pricing in a soft landing” for the U.S. economy, said Matt Stucky, chief portfolio manager at Northwestern Mutual Wealth Management Co., in a phone interview Friday.

Investors were digesting fresh economic data that included a positive reading from University of Michigan’s consumer-sentiment gauge for January. The preliminary reading of the sentiment survey shot up to 78.8, from 69.7 in December, to reach the highest level since July 2021.

“Better consumer confidence is a good thing for the economy,” said Stucky. “More confident consumers are more likely to spend and keep the economy pretty resilient.”

Chicago Federal Reserve President Austan Goolsbee, said in an interview with CNBC on Friday morning that the Fed could start cutting interest rates this year “if we continue to make surprising progress on inflation.”

“We don’t want to commit ourselves before the job is done,” Goolsbee said. But “as inflation comes down, that opens the door to a reduction in restrictiveness.”

See: Goolsbee says it’s too soon to determine when Fed will cut interest rates

Meanwhile, technology was the best-performing sector in the S&P 500 index on Friday afternoon, with a gain of around 1.6%, according to FactSet data, at last check.

The Invesco QQQ Trust Series 1 QQQ, an ETF that tracks the Nasdaq-100 index, was trading around $420 on Friday afternoon, FactSet data show, at last check. That put the exchange-traded fund on track to reach a fresh record high, according to Dow Jones Market Data.

The Nasdaq-100 index was helped along by gains from semiconductor companies Nvidia Corp. NVDA, +3.87% and Broadcom Inc. AVGO, +6.08%.

That’s after better-than-expected results from chip-making giant Taiwan Semiconductor Manufacturing Co. TSM, +0.99% on Thursday helped drive a sharp gain for the tech-heavy Nasdaq Composite. Semis were getting another boost on Friday after the latest sales guidance released by Super Micro Computer Inc. SMCI, +35.98%

“Basically, the Nasdaq is leading the way again, it looks like we’re at new highs here, the rally that started yesterday might have some legs,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

“If earnings hold up and guidance is within expectations, then I think the rally can continue.”

Markets entered 2024 with expectations for six or seven interest-rate cuts by the Federal Reserve. Those expectations have seen pushback, especially given strong economic data, such as retail-sales data, reported earlier this week.

In “a soft-landing scenario, you’re unlikely to see those six cuts come to fruition,” said Stucky. Treasury yields have been “grinding higher,” reflecting a resilient economy, he said.

The yield on the 10-year note BX:TMUBMUSD10Y was up about one basis point on Friday afternoon at around 4.15%, according to FactSet data, at last check.

After the U.S. stock market “took a pause” this month, the S&P 500 can probably keep rising in 2024 should it reach a record closing high on Friday, said Keith Lerner, co-chief investment officer at Truist Advisory Services, in a phone interview Friday. Even as the index took a break in January, “there’s been an underlying bid for the market,” he said, and “a lack of intense selling.”

U.S. companies in the S&P 500 index are largely beating analysts’ expectations so far this earnings season. Of the 52 companies in the S&P 500 that have already reported earnings for the final three months of 2023, 84.6% beat analysts’ expectations, according to data from LSEG.

In other economic data released Friday, existing-home sales for December came in roughly in line with expectations, falling 1%.

“Right now, the economy, earnings and the credit markets continue to show resilience,” said Lerner. He said he’s overweight large-cap stocks in the U.S. and views the pullback in small-cap stocks this month as a good “entry point” for those who may have missed their rally late last year. 

“This market rally is buying into that soft landing,” said Lerner. “If we don’t have that soft landing, we’re going to have challenges.”

Companies in focus

  • Shares of Wayfair Inc. W, +9.81% rose sharply after the company announced another round of layoffs.
  • Super Micro Computer Inc. SMCI, +35.98%, a manufacturer of computer products, saw its shares shoot higher after the company released a sales outlook that was far stronger than Wall Street had expected.  
  • Nvidia Corp. NVDA, +3.87% and Broadcom Inc. AVGO, +6.08% shares were up strongly in early trading amid widespread optimism in the chips space.
  • Shares of Roomba maker iRobot IRBT, -25.06%  sank on Friday following reports that European antitrust regulators planned to block a planned buyout by Amazon.com Inc.
  • Shares of Travelers Companies Inc. TRV, +6.73% jumped after the property-casualty insurer said lower catastrophe losses and higher underwriting gains helped produce record profits.

Barbara Kollmeyer contributed to this report

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