The S&P 500 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 TSX also ended solidly higher after a weak start, but remains more than 1,000 points away from its record high.
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 climbed 4.2% and Advanced Micro Devices rallied over 7% after server maker Super Micro Computer lifted its second-quarter profit forecast, sending its shares soaring 36%.
Investors exchanged $31 billion worth of Nvidia’s stock and US$23 billion worth of AMD shares, higher turnover than any other company on Wall Street, according to LSEG data.
The Philadelphia SE Semiconductor index soared 4% to a record high, while the S&P 500 information technology sector index jumped more than 2% to a record highs.
Microsoft and Apple, 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.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 149.79 points, or 0.7%, at 20,906.52. For the week, the index was down 0.4%, after posting last Friday its highest weekly closing level in 21 months.
“There is more excitement about a soft landing,” said Angelo Kourkafas, a senior investment strategist at Edward Jones. “Economic data continues to come in strong in the U.S. while inflation expectations ... continue to decline.”
Data Friday showed U.S. consumer sentiment rose to the highest level in 2-1/2 years amid growing optimism over the outlook for inflation and household incomes.
Canadian data showed retail sales falling 0.2% in November from October but initial estimates pointed to a rebound in December.
Financials, the most heavily-weighted sector on the Toronto market, climbed 1.2% and technology ended 1.6% higher.
The Bank of Canada is due to make an interest rate decision on Wednesday. The central bank will wait until at least June to cut its key interest rate as price pressures remain sticky, according to a Reuters poll.
“Regardless if its March, April or a few months later we are going to be see a major pivot towards less restrictive policy and that’s a positive for equities,” Kourkafas said.
Real estate in Toronto, which tends to be particularly sensitive to the outlook for interest rates, was up 2.6%.
Investment management company Blackstone agreed to take Tricon Residential Inc private in a US$3.5 billion deal. Tricon’s shares jumped 27.3%.
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.
“Records are made to be broken and the broadening of market action in the past few months is reassuring. The resiliency of the U.S. economy in general, and most businesses in particular, has been notable,” said Carol Schleif, Chief Investment Officer at chief investment officer at BMO’s family office in Minneapolis.
Travelers Cos jumped 6.7% after the insurer’s fourth-quarter profit more than doubled, while State Street advanced 2.1% after the lender reported record net inflows in its Global Advisors unit in the fourth quarter.
Spirit Airlines 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 slumped almost 27% after a report said the European Union’s competition watchdog plans to block Amazon.com’s $1.4-billion acquisition of the robot vacuum maker.
Advancing issues outnumbered falling ones within the S&P 500 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.
Reuters, Globe staff