NASDAQ 100, Dow Jones, S&P 500: Investor Confidence Rises as S&P 500, Nasdaq Extend Winning Streak

Highlights

• Fed pause boosts market sentiment.
• S&P 500 and Nasdaq achieve significant milestones.
• Tech stocks lead the market with impressive gains.

Overview

Throughout the week, the market achieved significant milestones, showcasing its resilience. The S&P 500 delivered its best performance since March, with a 3% increase. Moreover, it achieved a five-week winning streak, a feat not seen since November 2021, and is now up more than 26% from its bear market low. The Nasdaq Composite also had an outstanding week, posting a 4% gain, its best performance since March, and continuing its eight-week winning streak, the longest since 2019.

Tech Stocks Propel Market’s Positive Trajectory

Tech stocks played a crucial role in driving the market’s positive trajectory. Adobe’s impressive quarterly results and upbeat guidance propelled its shares up by over 2%. AI darling Nvidia extended its phenomenal surge this year, recording a 12% increase for the week. Meanwhile Microsoft saw a notable 6% gain and reached a new all-time high on Thursday. It is worth noting that tech shares faced initial challenges when the Federal Reserve began its rate-hiking campaign but have since rebounded strongly.

Hot AI Sector Carrying Market

Investor confidence remains high in the AI sector, with the belief that this trend will endure and favor U.S. stocks due to diverging central bank policies worldwide. While some analysts view the current stock market rally as potentially overextended, the abundance of sidelined funds indicates the possibility of the S&P 500’s winning streak continuing, provided the AI trade remains intact. A decline in inflation expectations further supports this positive sentiment, as the May consumer price index reveals the lowest inflation rate in two years.

Volatility Expected as Quadruple Witching Approaches

Traders anticipate a volatile session on Friday as they look ahead to the quarterly rebalancing of indexes and the expiration of certain options, known as the quadruple witching. These events can potentially increase market volatility and trading volume, but historical patterns suggest that expiration weeks tend to exhibit higher performance during bull markets and lower performance during bear markets.This bodes well, at least in the short term, for the S&P 500 and Nasdaq Composite, which have displayed robust performances throughout the week.

Traders Reflect on Fed Pause, Strong Tech Performances

Traders are preparing for a long weekend. The markets will be closed on Monday in observance of Juneteenth. Investors are reflecting on this week’s Fed’s rate pause and market milestones. Strong tech performances boost trader confidence.With easing inflation expectations and the S&P 500 and Nasdaq Composite showing resilience, the market outlook suggests the potential for further gains in the near future.