For the second consecutive day, Wall Street's three major stock indexes achieved record closing highs, bolstered by the Federal Reserve's reassurance of potential rate cuts this year and a surge in chip stocks following Micron Technology's optimistic forecast. Earlier in the day, all three indexes reached new intra-day record highs, with the Dow closing just shy of the historic 40,000 mark for the first time.
Micron Technology (MU.O) shares surged over 14% to hit a record high after announcing an unexpected quarterly profit and forecasting third-quarter revenue surpassing estimates. Broadcom (AVGO.O) shares climbed 5.6% following an upgrade by TD Cowen to "outperform." Nvidia (NVDA.O) also contributed to the rally, gaining over 1%, while the Philadelphia Semiconductor index (.SOX) soared 2.3%.
On Wednesday, U.S. stock indexes reached record closing levels as U.S. central bankers maintained unchanged borrowing costs, signalling their anticipation of reducing interest rates by three-quarters of a percentage point by the end of 2024.
Earnings results are keeping semiconductors as market leaders but more broadly a risk on mode has stemmed from the dovish Fed on Wednesday.
Matthew Miskin, Co-Chief Investment Strategist at John Hancock Investment Management
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Fed's Inflation Outlook: Market Optimism Prevails
Following the Fed's policy meeting on Wednesday, Fed Chair Jerome Powell remarked that inflation reports have yet to significantly alter the narrative, which entails inflation gradually declining toward 2%, albeit with occasional bumps.
However, John Hancock's Miskin doubts the Fed's optimism regarding inflation and rate cuts, suggesting they may unintentionally reintroduce inflation risk into the market. Despite this concern, economic data released earlier Thursday further buoyed investors' optimism.
Unexpectedly, the number of Americans filing new claims for unemployment benefits decreased last week, and sales of previously owned homes experienced the most significant increase in a year in February, indicating a resilient economy in the first quarter. Miskin noted that the economy continues to surpass expectations, a sentiment that resonates well with the markets.
Stocks Surge, Challenges Ahead
The Dow Jones Industrial Average (.DJI) climbed by 269.24 points, or 0.68%, to 39,781.37, while the S&P 500 (.SPX) gained 16.91 points, or 0.32%, to 5,241.53. The Nasdaq Composite (.IXIC) also increased by 32.43 points, or 0.20%, to 16,401.84.
Among the major S&P 500 industry sectors, nine out of eleven ended higher, with industrials (.SPLRCI) leading the gains, up 1%. Conversely, utilities (.SPLRCU) were the weakest sector, closing down 0.2%. A 0.17% drop followed this in communications services (.SPLRCL), primarily dragged down by Alphabet (GOOGL.O), which fell by 0.8%.
Goldman Sachs (GS.N) closed up by 4.4%, leading gains in the Dow and the rate-sensitive bank sector, while the S&P 500 bank sector (.SPXBK) added 1.7%.
Apple (AAPL.O) defied the market trend, closing by 4.1% after facing a major antitrust lawsuit from the U.S. Department of Justice, alleging monopolization of smartphone markets.
Accenture's shares plummeted by 9% as it reduced its fiscal year 2024 revenue forecast due to economic uncertainty affecting clients' consulting services spending.
Reddit shares closed at $50.44 after debuting on the New York Stock Exchange at $47, marking a 38% increase from its $34 initial public offering price. Advancing issues on the NYSE outnumbered decliners by a ratio of 2.34-to-1, with 918 new highs and 56 new lows.
On the Nasdaq Composite, 1,776 stocks rose compared to 1,400 falling, with advancing issues outnumbering decliners by a ratio of 1.27-to-1. The S&P 500 recorded 116 new 52-week highs and one new low, while the Nasdaq posted 365 new highs and 59 new lows.
Trading activity on U.S. exchanges saw 11.43 billion shares exchanged, slightly below the 12.39 billion moving average for the last 20 sessions.
Wall Street saw consecutive record highs driven by Fed reassurances and strong chip stock performances. Despite lingering concerns, upbeat economic data underscored market resilience, reflecting ongoing investor confidence amidst challenges.