The S&P 500 (SPX) index rose less than 0.1% on Wednesday, still reaching its fourth-consecutive fresh record. The technology benchmarks NASDAQ-100 (NDX) and NASDAQ Composite (NDAQ) rose for the fifth session in a row, with the latter also closing at a new high. The only main index to finish lower was the Dow Jones Industrial Average (DJIA), dragged down by the downbeat annual profit forecast at AT&T (T) and the weak results of other blue chips.
The biggest moves upward were in technology stocks, where Microsoft (MSFT) jumped, briefly becoming the second company ever – after Apple (AAPL) – to top the $3 billion market cap. At the same time, Tesla (TSLA) fell strongly on underwhelming earnings and outlook. Despite the EV-maker’s weakness, the “Magnificent Seven” stocks clocked in twice the gain of the SPX so far this year.
Another tech giant that has helped tech to maintain its strong outperformance was Netflix (NFLX), whose better-than-expected earnings propelled the stock by over 16% YTD. Meta Platforms (META) also surged to a new record, becoming the latest stock to top $1 trillion market valuation. Semiconductor stocks rallied, adding steam to tech’s surge, after ASML Holding’s (ASML) quarterly results and outlook pointed to a recovery in global chip demand.
The technology stocks seem to continue their end-2023 melt-up, propelling the market. Less than a month into the new year, the S&P 500 has already blown past the average Wall Street target for the end of 2024. This surge, with an exciting new technology (AI) as a forceful tailwind, has already made some analysts wonder whether the stock market is in the process of inflating a bubble similar to the Dot Com bubble of the late 1990s.
Meanwhile, the debate over the timing of the Federal Reserve’s prospective cuts is heating up again, as the economy looks to have started the year on a strong note. The fresh data showed that the U.S. business activity rose this month, with both services and manufacturing PMIs indicating expansion. Investors are bracing for the market-moving reports on Q4 GDP and December’s PCE inflation, coming out today and tomorrow, respectively. With data driving expectations, traders now see little chance of a Fed cut in March, pushing their monetary easing predictions to May.
