S&P 500 notches first record high close in 2 years; chipmakers soar

It was a big shot straight up on all the indexes as the market enjoyed a huge rally triggered by its second consecutive day of AI exuberance and the big boost it gave to chipmakers after Wednesday’s announcement by the world’s biggest chipmaker that it “saw booming demand for high-end chips used in AI.” These two rallies have also finally pushed the S&P beyond the coveted 4,796 high mark achieved on January 3, 2022 and even beat it by 45 points to signal the end of the index’s long bear market and a much anticipated new bull market. 

The big concern now is whether it’s sustainable which the next few weeks will tell as Q4 earnings flow in, the consensus being that earnings must justify company valuations to maintain the bullish sentiment. Lacking that, there might be trouble. So all eyes will now be on Q4. Other goods news included the U of M survey showing consumer sentiment at its highest level in 2-1/2 years. Volume was heavy at 12.3 billion. 

S&P 500 notches first record high close in 2 years; chipmakers soar

By Noel Randewich and Johann M Cherian

Fri January 19, 2024 7:15 PM

DJ: 37,468.61  +201.94       NAS: 15,055.65  +200.03       S&P: 4,780.94  +41.73     1/18

DJ: 37,863.80  +395.19       NAS: 15,310.97  +255.32       S&P: 4,839.81  +58.87     1/19

Jan 19 (Reuters) - The S&P 500 (.SPX), opens new tab posted a record high close on Friday for the first time in two years, fueled by a rally in chipmakers and other heavyweight technology stocks on optimism around artificial intelligence.  The benchmark's close confirmed that the S&P 500 has been in a bull market since it closed at its low on Oct. 12, 2022, according to one measure which also puts that date as the end of a bear market.  In a selloff between its record high close of 4,796.56 on Jan. 3, 2022 and its low in October 2022, the S&P 500 tumbled 25%.  On Friday, the S&P 500 jumped 1.23% to end the session at 4,839.81 points.

"It really is an encouraging day in terms of the action, and 4,800 certainly has been a key level which has been difficult to surmount. So if we continue to move in this direction, that's going to be a very positive sentiment sign," said Lisa Erickson, head of public markets at U.S. Bank Wealth Management in Minneapolis.

Nvidia (NVDA.O), opens new tab climbed 4.2% and Advanced Micro Devices (AMD.O), opens new tab rallied over 7% after server maker Super Micro Computer (SMCI.O), opens new tab lifted its second-quarter profit forecast, sending its shares soaring 36%.  Investors exchanged $31 billion worth of Nvidia's stock and $23 billion worth of AMD shares, higher turnover than any other company on Wall Street, according to LSEG data.  The Philadelphia SE Semiconductor index (.SOX), opens new tab soared 4% to a record high, while the S&P 500 information technology sector index (.SPLRCT), opens new tab jumped more than 2% to a record highs.

Microsoft (MSFT.O), opens new tab and Apple (AAPL.O), opens new tab, the world's two most valuable companies, both rose more than 1%.  Chipmaker stocks have gained since Taiwan Semiconductor Manufacturing Company, the world's largest contract chipmaker, on Wednesday said it saw booming demand for high-end chips used in AI.

The Nasdaq jumped 1.70% to 15,310.97 points, while Dow Jones Industrial Average rose 1.05% to 37,863.80 points.

Volume on U.S. exchanges was heavy, with 12.3 billion shares traded, compared to an average of 11.5 billion shares over the previous 20 sessions.

After surging through December, Wall Street treaded water in recent weeks as investors reined in expectations the Federal Reserve would start cutting interest rates as soon as March.  Interest rate traders now see a 52% chance of a March rate cut, according to the CME Group's FedWatch Tool.

Stock investors were also cheered on Friday by the University of Michigan's preliminary survey showing consumer sentiment improved in January to its highest level since the summer of 2021.

The S&P 500 could lose steam if companies reporting quarterly results over the next few weeks fail to justify relatively high valuations. Netflix (NFLX.O), opens new tab reports on Tuesday, followed by Tesla (TSLA.O), opens new tab on Wednesday.  "This new record level of the S&P 500 is sustainable as long as earnings meet expectations," said Steve Sosnick, Chief Strategist at Interactive Brokers.  "If, on the other hand, we find out that the market has either gotten ahead of itself ... or we get guidance from some of these companies that doesn't match the bullish sentiment that's being priced into them, that can be a real risk.”

Travelers Cos (TRV.N), opens new tab jumped 6.7% after the insurer's fourth-quarter profit more than doubled, while State Street (STT.N), opens new tab advanced 2.1% after the lender reported record net inflows in its Global Advisors unit in the fourth quarter.  Spirit Airlines (SAVE.N), opens new tab rebounded 17% from losses earlier this week as it assessed options to refinance its 2025 debt maturities amid concerns over the airline's ability to remain afloat.  iRobot (IRBT.O), opens new tab slumped almost 27% after a report said the European Union's competition watchdog plans to block Amazon.com's (AMZN.O), opens new tab $1.4-billion acquisition of the robot vacuum maker.

Advancing issues outnumbered falling ones within the S&P 500 (.AD.SPX), opens new tab by a 2.9-to-one ratio.  The S&P 500 posted 60 new highs and 3 new lows; the Nasdaq recorded 97 new highs and 191 new lows.