US stocks surge on improved risk appetite

US stocks experienced a surge in intraday records, with the S&P 500 and Nasdaq reaching new highs. The Nasdaq set a new intraday record, surpassing its November 2021 peak of 16,212.23.

Technology stocks, particularly Nvidia and AMD, saw significant gains, with shares climbing 3.73% and 4.82% respectively. The Philadelphia semiconductor index.SOX also reached a record high. The economy is resilient, with investors awaiting the timing of the first interest rate cut by the Fed, with expectations targeting June.

Despite a strong services sector and tight labour market, the economy still shows weaknesses, particularly in the manufacturing sector in light of ISM Manufacturing PMI figures. This has led to lower US Treasury yields, with the two-year note yield falling to as low as 4.525%. Fed Governor Chris Waller stated that the central bank’s decisions about the size of its balance sheet have no bearing on its inflation fight.

Advancing issues outnumbered decliners by a 2.11-to-1 ratio on the NYSE and a 1.68-to-1 ratio on the Nasdaq. The earnings season in Q4 2023 showed continued corporate strength despite concerns about the US economy and the timing of the Federal Reserve’s interest-rate cuts. The Nasdaq Composite rose to an all-time high, surpassing its 2021 record, as investors bet that Megacap technology stocks would help slow inflation and a coming artificial intelligence boom.

The tech industry is experiencing a surge due to the emphasis on AI and the late 90s redux, according to Jamie Cox, managing partner at Harris Financial Group.

The Nasdaq and S&P 500 are on track for their seventh positive week in the last eight, with the Dow down 0.1%. Stocks gained despite troubled regional bank New York Community Bancorp’s 24% decline after a leadership change and internal control issues. The bank is already down over 63% in 2024, raising concerns about a wider real estate shakeout.

The personal consumption expenditures price index, the Federal Reserve’s preferred gauge, rose 0.4% in January, in line with expectations. The market is experiencing a significant shift in focus on AI and the late 90s.