US stocks closed at fresh record highs, marking a ninth-straight week of gains for the S&P 500 Index, a feat achieved only four other times since 1985. The tech-heavy Nasdaq 100 Index and the Dow Jones Industrial Average also saw significant climbs, rising 0.4% and 0.7% respectively. This prolonged rally is attributed to increasing hopes for a peace deal between the US and Iran, alongside continued excitement about artificial intelligence (AI) driving corporate earnings growth.
The tech sector was a significant catalyst for the market's performance. Dell Technologies, for instance, saw its shares jump almost 30% after it raised its full-year profit and revenue forecasts, largely due to booming demand for AI-related hardware. This positive outlook extended to other tech firms, with Hewlett Packard Enterprise gaining 15.5% and Super Micro Computer rising 12.7%. The software services index advanced 5%, recovering all losses since January, demonstrating renewed investor confidence in the sector despite earlier concerns about AI disruption.
Despite the overall optimism, concerns about inflation and the Federal Reserve's monetary policy remain. US economic data showed inflation increased at its fastest pace in three years in April, while first-quarter GDP was revised lower to a 1.6% annual rise. Federal Reserve officials, including Kansas President Jeffrey Schmid and Vice Chair for Supervision Michelle Bowman, have warned that persistent inflation might necessitate tighter monetary policy. However, money markets generally expect the Federal Reserve to keep interest rates steady for the rest of the year, with only some expectations of a 25 basis point hike in December.
In other company news, Gap shares tumbled 17.3% after the apparel retailer cut its annual sales forecast, and American Eagle Outfitters dropped 12.6% after maintaining, rather than raising, its annual comparable sales forecast. Crude oil prices eased, with US crude falling 1.73% to $87.36 per barrel and Brent crude settling at $92.05 per barrel, down 1.77%, on hopes of an extended truce and the reopening of the Strait of Hormuz, which could alleviate inflationary pressures.
