Stocks experienced a significant surge on Friday, driven by the remarkable performance of technology stocks, as Wall Street aimed to conclude a strong first half of the year on a positive note. Furthermore, the latest inflation data indicated ongoing signs of cooling, providing additional support to the market.
Technology Stocks Drive Market Gains
Mega-cap technology stocks, which have been major contributors to the market’s growth in 2023, continued to rise on Friday. Nvidia, a dominant artificial intelligence chipmaker, saw its stock surge by over 3%, bringing its yearly gains to an impressive 190%. Meta Platforms also recorded a 2% increase, while Netflix witnessed a growth of more than 3%. Apple’s stock rose by 1.7%, pushing its market cap beyond $3 trillion.
Nike Struggles Amidst Market Uptrend
In contrast to the broader market trend, Nike shares faced a decline of over 2% after reporting a weaker-than-expected quarterly profit. The apparel giant struggled to match the overall positive sentiment.
Encouraging Inflation News Boosts Market Confidence
Wall Street received a positive signal regarding inflation when the May core personal consumption expenditures (PCE) price index, a closely watched indicator by the Federal Reserve, showed a rise that fell short of expectations. Core PCE increased by 4.6% compared to the previous year, below the economists’ expectation of 4.7%.
Including volatile food and energy components, inflation was considerably milder, rising by only 0.1% in May and 3.8% over the past year. These figures marked a decline from the April reports, which indicated increases of 0.4% and 4.3%, respectively.
Positive Outlook on Inflation
Jamie Cox, the managing partner for Harris Financial Group, expressed optimism about the progress in the fight against inflation. He stated, “This is excellent news on the inflation fight. If one doubts the occurrence of disinflation, they may not be fully attentive. The Federal Reserve’s decision to pause and maintain its current levels is justified to avoid overcorrection and the potential of an unwarranted recession while effectively managing the situation.
The second half of the year looks promising.
Friday holds great significance for investors, as it not only signifies the end of June but also marks the conclusion of the second quarter and the first half of the year. The past six months witnessed a notable resurgence of growth names that struggled in 2022. The promise of artificial intelligence and hopes of an end to the Federal Reserve’s rate campaign propelled major technology players to remarkable heights.
Despite these strong gains, some experts on Wall Street anticipate potential volatility in the second half of the year, with many investors likely to take profits. This, combined with changing technical factors, may result in sideways movement or a slight pullback in the S&P. Anna Han, an equity strategist at Wells Fargo Securities, noted, “The technicals are telling us that this ubercap-led rally has just been overextended. The market has reached overbought levels, indicating that it is now appropriate for the trade to take a pause.
Current Performance of Major Stock Indexes
As of Friday’s opening, here is the current status of the major stock indexes:
June Performance: The S&P 500 has witnessed a 6% gain, on track for its best monthly performance since January. The Nasdaq has also advanced by 6.1%, marking its fourth consecutive positive month. The Dow has climbed by 4.3%, on pace for its best month since November.
Second Quarter Performance: The S&P 500 has experienced a 7.9% rise, aiming for a third straight quarter of gains. The Nasdaq boasts a gain of 12%, indicating back-to-back positive quarters. The Dow has recorded a 3.3% increase, with a third winning quarter on the horizon.
Year-to-Date and First Half Performance: The S&P 500 has soared by 15.5%, setting the stage for its best first half since 2019. The Nasdaq has surged by an impressive 31%, on track for its best first half since 1983. The Dow has recorded a more moderate increase of 3.6%.
All three major averages are set to conclude the week on a positive note, with the S&P and Nasdaq up by over 2% each, while the Dow has gained 2%.
In summary, the stock market experienced a surge driven by the outstanding performance of technology stocks, marking the positive conclusion of the first half of the year. Encouraging inflation data and the resurgence of growth names contributed to the market’s overall confidence. However, experts anticipate potential volatility in the second half, and technical factors suggest a possible pause in the current rally.