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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., November 7, 2022.
Brendan Mcdermid | Reuters
Stocks rose Friday as investors returned to buying equities in force in recent days following a short-lived market stumble to start the new year.
The S&P 500 rose 0.3% to briefly trade above its all-time closing high of 4,796.56, a record set in January 2022. Meanwhile, the Dow Jones Industrial Average added 101 points, or 0.3%. The Nasdaq Composite advanced 0.5%.
The broader market index was also within striking distance of 4,818.62, its intraday record. The Nasdaq-100 also gained 0.6% to hit a record high.
Insurance company Travelers rose more than 5% after posting an earnings beat. Schlumberger N.V. gained 2% after beating on top and bottom lines, and Ally Financial surged 9.5% after reporting strong quarterly results and a sale of a business unit to Synchrony Financial.
S&P 500, 1 year
Wall Street is coming off a strong session in which the S&P 500 and Nasdaq erased their 2024 losses. Those gains were powered by major advances in the technology sector, after Bank of America upgraded shares of Apple, which posted its biggest one-day gain since May 5, 2023.
“In the mind of the investor, [companies] leading in AI or having a product set that’s differentiated in the tech space is very, very strongly leading the market. That’s been a wave that’s persisted throughout the remainder of last year and into 2024,” said Matt Stucky, chief portfolio manager at Northwestern Mutual Wealth Management.
Following a 19% loss in 2022, the S&P 500 roared back in 2023, posting a 24% gain as the economy skirted a recession that many had expected and inflation came down to levels that allowed the Federal Reserve to pause its interest rate hikes. The benchmark came close to reaching a record following a forceful fourth-quarter rally, but ultimately fell short. The market rally paused a bit to start 2024 as investors took some profits in the Big Tech leaders like Apple.
But they returned to buying those tech leaders in recent days. If the S&P 500 does close at a record on Friday, it would confirm that the stock market is officially in a bull market that began in October 2022. The S&P 500 is up more than 33% since that low.
Whether the broader market index can maintain its growth momentum in 2024 “is going to be a question of whether the Fed is able to stick a soft landing or not,” Stucky said. He noted that the driver of the S&P 500’s growth in 2023 was tied to multiples, rather than earnings.
“Multiples rise coming out of economic slowdowns, because investors are pricing in a recovery. If that recovery doesn’t materialize, then you do have to question the sustainability of not only holding on to new highs, but making new highs beyond that,” Stucky added.
Wall Street also kept its eyes on Washington after Congress passed a bill to avert a partial government shutdown. This stopgap measure keeps the federal government funded through March 1 and March 8. The bill goes to President Joe Biden for signing. Investors see the divisive political climate as a possible threat to the market this year.
Fresh consumer data on Friday indicated that consumers are becoming more confident on the economy and inflation. The University of Michigan’s Survey of Consumers showed a 21.4% year-over-year jump to reach its highest level since July 2021.
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