Stocks rose on Friday, with the S&P 500 and Nasdaq closing at record highs as technology stocks rallied on continued enthusiasm for artificial intelligence, while a fall in Treasury yields provided further support. Canada’s main stock index climbed to a near two-year high, led by gains for resource and technology shares.
The rally marked the second straight closing record for the Nasdaq, which also set an intraday record as AI-related names such as Nvidia and Meta Platforms led it past its prior peak of 16,212.23 set in November 2021.
Through the end of February, the three major U.S. indexes notched their fourth straight month of gains in a rally largely fueled by growth prospects related to AI, which has also lifted semiconductor names.
On Friday, shares of Nvidia climbed 4% and closed above US$2 trillion in market value for the first time. Rival Advanced Micro Devices shares gained 5.25% to a record high close of $202.64, while the broader Philadelphia semiconductor index also closed at a record after a jump of 4.29% on the session.
Markets have drawn support from a resilient economy, as investors have tried to gauge the timing of the first interest rate cut by the Federal Reserve, with investors currently targeting June and growing expectations the central bank can engineer a soft landing for the economy.
“Because the economy is doing well and because inflation remains a bit sticky, the Fed will be slower to lower interest rates,” said Sam Stovall, chief investment strategist at CFRA Research in New York. “But that’s good because then we’re gradually coming off of the higher interest rate cycle and we’re not in need of cutting rates aggressively.”
Despite a strong services sector and tight labor market, the economy still shows pockets of weakness, notably in manufacturing, although data on Friday included some signs of a possible rebound.
The Institute for Supply Management (ISM) said its purchasing managers index for manufacturing fell to 47.8 from 49.1 in January. It was the 16th straight month that the PMI remained below 50, which indicates contraction.
The ISM survey showed customer inventories declining for a third straight month, considered positive for future new orders and production growth.
The University of Michigan’s surveys of consumers also was weak, with all three measures for sentiment, current conditions and consumer expectations declining more than expected.
The two-year U.S. Treasury yield, which reflects interest rate expectations, fell 10.6 basis points to 4.540%, its biggest single-day decline since Jan. 31. The yield on the benchmark 10-year note slid 6.6 basis points to 4.186%. Yields move inversely to prices. Canadian bond yields largely tracked those moves.
Fed Governor Chris Waller said on Friday that upcoming decisions about the ultimate size of its balance sheet have no bearing on its inflation fight.
Fellow Fed Governor Adriana Kugler said she is cautiously optimistic progress will continue on disinflation without a significant weakening of the labor market, and that the central bank has avoided a wage-price spiral. Richmond Fed President Thomas Barkin said it is too soon to predict when the Fed will be able to begin cutting rates.
The Toronto Stock Exchange’s S&P/TSX composite index ended up 188.74 points, or 0.9%, at 21,552.35, its highest closing level since April 2022. For the week, the index was up 0.7%.
Higher commodity prices boosted resource shares, with gold rising 2%, copper up 0.5% and oil settling 2.2% higher at US$79.97 a barrel.
“With the expectations of the Fed cutting interest rates, that’s putting a little bit of downward pressure on the U.S. dollar and you get the inverse relationship of higher commodity prices,” said Philip Petursson, chief investment strategist at IG Wealth Management.
The TSX energy sector and materials, which includes which includes precious and base metals miners and fertilizer companies, both added 2%.
Uranium producers contributed to the rally, with NexGen Energy Ltd up 9.5% and Cameco Corp advancing 3.5%, after Reuters reported on Thursday that Canada will expedite the approval process for new nuclear projects.
The TSX information technology sector also posted strong gains, climbing 1.5% and industrials were up 0.7%.
Shares of SNC-Lavalin Group Inc jumped 11.4% after the construction and engineering company reported fourth-quarter results that beat estimates.
The Dow Jones Industrial Average rose 90.99 points, or 0.23% , to 39,087.38, the S&P 500 gained 40.81 points, or 0.80%, to 5,137.08 and the Nasdaq Composite gained 183.02 points, or 1.14%, to 16,274.94.
For the week, the S&P 500 gained 0.95%, the Nasdaq rose 1.74%, and the Dow fell 0.11%.
The S&P 500 tech index was the top performer of the 11 major sectors, gaining 1.78%, while utilities were weakest, showing a decline of 0.72%.
Among major movers, New York Community Bancorp tumbled 25.89% after the regional lender said it had found “material weaknesses” in internal controls related to its loan review and revised its fourth-quarter loss to 10 times above the previously stated numbers, which helped send the KBW regional banking index 1.27% lower.
Dell Technologies surged 31.62%, its biggest daily percentage gain ever, after the personal computer maker forecast annual revenue and profit above Wall Street estimates.
Gains on the Dow were curbed in part by a 1.83% fall in Boeing after a report said the planemaker was in talks to buy supplier Spirit AeroSystems.
Advancing issues outnumbered decliners by a 2.29-to-1 ratio on the NYSE and by a 1.55-to-1 ratio on the Nasdaq.
The S&P 500 posted 87 new 52-week highs and 2 new lows while the Nasdaq recorded 363 new highs and 88 new lows.
Reuters, Globe staff