Nasdaq, S&P 500 Set 2023 Highs

Topline

The tech-heavy Nasdaq hit a 14-month high Friday, largely driven by massive gains from a handful of the widely tracked tech index’s largest companies, while the Dow Jones Industrial Average and S&P 500 each hit key milestones of their own as optimism is aplenty on Wall Street.

Bullish investors flooded Wall Street Friday.

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Key Facts

The Nasdaq Composite closed at its highest level since April 21, 2022, wiping out what was once as steep as a 40% loss last year as investors dumped rate-sensitive tech stocks while the Federal Reserve hiked interest rates to their highest level since the mid-2000s.

But largely resilient earnings and unfettered optimism about what artificial intelligence could mean for future bottom lines helped the Nasdaq surge 27% so far this year, far outpacing the S&P 500 and the Dow Jones industrial average’s 12% and 2% year-to-date gains, respectively.

Buoying the Nasdaq’s recovery are the mega-cap companies largely generating the biggest AI buzz; chipmakers Nvidia and AMD and generative AI leaders Alphabet and Microsoft are each up more than 40% year-to-date.

The Nasdaq’s milestone Friday came amid a strong day overall for stocks, as the S&P and Dow each gained more than 1% after government data revealed a strong labor market.

In fact, the Dow’s 700-point gain marks its best day since January 6.

The S&P’s closing price of 4,283 is its highest since last August, though it remains about 10% below its peak achieved in 2022.

Big Number

Nearly $4 trillion. That’s how much market cap the seven biggest companies listed on the Nasdaq (Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta) have gained in 2023.

Surprising Fact

The S&P is now at the same level it closed at March 22, 2022, the first rate increase of the current Fed hiking cycle, noted Bespoke Investment Group.

Tangent

The CBOE VIX Index, a volatility metric, which acts as a “fear gauge” for Wall Street, sank nearly 6% Friday to its lowest level since February 2020, shortly before pandemic lockdowns.

Key Background

The U.S. economy “is not showing strong signs” that a recession will come this year, Oanda analyst Ed Moya declared Friday, saying steady output and consumer spending is “short-term good news for the stock market.” The Nasdaq is coming off of its worst year since 2008 after it crashed 33%, losses that far outpaced the Dow’s and S&P’s. Fueling the tech investor fire was the November release of the viral, Microsoft-backed ChatGPT AI chatbot, which led to a spike in investments in generative AI developments and the hardware powering the technology.