S&P 500 and Nasdaq notch records on AI and earnings optimism

The S&P 500 and Nasdaq Composite closed at record highs on Friday, lifted by gains in AI chipmakers and a first-quarter earnings season running well ahead of analyst expectations.

The S&P 500 rose 0.84 per cent to 7,398.93 and the Nasdaq added 1.71 per cent to 26,247.08. Both indices logged a sixth consecutive weekly gain on the close, the longest such streak for either benchmark since October 2024. The Dow Jones Industrial Average finished broadly flat, up 0.02 per cent to 49,609.16.

For the year, the S&P 500 is up 8 per cent and the Nasdaq 13 per cent. The advance has come despite Brent crude trading above $100 a barrel on continuing hostilities in the Strait of Hormuz, a level that earlier in the cycle was treated as a brake on equity sentiment.

“This is an economy that seems hard to wreck,” said Rob Williams of Sage Advisory.

Earnings season has remained the dominant driver of the move. With 440 of the S&P 500’s constituents now reported, first-quarter profits are tracking 29 per cent higher than a year ago, according to LSEG I/B/E/S data. Some 83 per cent of those firms have beaten analyst estimates, against a long-term average of 67 per cent. The breadth of the beat has narrowed the gap between blended sector growth and the year-on-year gain delivered by the megacap technology names that led earlier quarters.

Chipmakers lead the rally

The S&P 500 technology index advanced 2.7 per cent on the day. The Philadelphia Stock Exchange Semiconductor index rose 5.51 per cent and is now up 55 per cent in the second quarter alone, leaving chipmakers comfortably among the year’s best-performing groups.

Nvidia gained 1.75 per cent. Micron Technology and SanDisk each climbed 15 per cent on continued AI memory demand, extending Micron’s gain to roughly 38 per cent over the past week. Sentiment was further boosted by reports that Intel held preliminary talks to manufacture chips for Apple, a development that pushed Intel shares 16 per cent higher earlier in the week.

Drags on the tape

The advance was not unanimous. Cloudflare fell 23.62 per cent after the company said it would cut about 20 per cent of its workforce, the steepest single-day move among large-cap technology names. CoreWeave dropped 11.4 per cent, Expedia 9.02 per cent and Trade Desk 1.75 per cent.

Macro backdrop

April’s US employment report, released earlier in the day, showed jobs growth running ahead of forecasts while the unemployment rate held steady at 4.3 per cent. The data did little to shift expectations for the Federal Reserve, which is now seen holding rates in a 3.50 to 3.75 per cent range through year-end as Jerome Powell prepares to hand the gavel to incoming chair Kevin Warsh.

Trading volume came in at 17.2 billion shares, against a 20-session average of 17.6 billion.

Markets next week will turn to a heavier slate of consumer earnings and Treasury auctions, with the Federal Open Market Committee meeting minutes also on the calendar.