Key Takeaways:
The S&P 500 and Nasdaq Composite surged to new records Friday, as an 18-day rally in semiconductor stocks fueled fresh optimism in the artificial intelligence trade.
"Using the tradable VanEck Semiconductor ETF (SMH) as a proxy, the group is now up right around 40% since then, which is a record 18-day rally since its inception,” Bespoke Investments said in a note.
The tech-heavy Nasdaq Composite climbed 1.6% while the S&P 500 added 0.8%. The Philadelphia Semiconductor Index jumped over 4%, with Intel Corp. soaring more than 22% and Nvidia Corp. adding 5.2% to reclaim a $5 trillion market capitalization. In contrast, the Dow Jones Industrial Average slipped 0.2%.
The semiconductor industry group accounts for 15.5% of the S&P 500's weight and has contributed roughly 40% of the index's gains since March 30, highlighting the sector's critical role in driving the broader market higher. The rally comes as investors weigh cooling oil prices and a slight improvement in consumer sentiment, which remains near record lows.
Intel shares had their best day since 1987, closing at a record high that surpassed their peak from the dot-com era in 2000. The surge followed a first-quarter earnings report that beat analyst expectations and offered a strong outlook, which the company attributed to “unprecedented demand” for its chips to support AI.
The bullish sentiment lifted other chipmakers. Advanced Micro Devices Inc. jumped about 10% after D.A. Davidson upgraded the stock to a Buy rating, citing Intel’s results as a precursor for a “huge step-up” for AMD’s own CPU franchise. Arm Holdings Plc and Qualcomm Inc. also rallied, gaining 11% and 14% respectively.
Nvidia’s stock gained 5.2%, adding $260 billion in value and putting its market capitalization $1 trillion ahead of the next largest company, Alphabet Inc.
The broader tech rally, however, was not universal. The iShares Expanded Tech-Software Sector ETF is down nearly 1% over the past five days, underperforming the iShares Semiconductor ETF, which is up more than 11% in the same period.
In the commodities market, oil prices edged lower on hopes of renewed peace talks between the U.S. and Iran. West Texas Intermediate futures slipped to about $95 a barrel, while Brent crude, the global benchmark, dipped below $100. Gold edged up 0.2% to $4,735 an ounce. The 10-year Treasury yield was little changed at 4.31%.
Investors also digested news that the Department of Justice dropped its criminal investigation into Federal Reserve Chair Jerome Powell, a move seen as clearing a path for the confirmation of President Trump’s nominee to lead the central bank, Kevin Warsh.
This article is for informational purposes only and does not constitute investment advice.
