Key Takeaways:
The S&P 500 closed at a record for the second straight day, extending its winning streak to nine weeks — the longest since December 2023 — as cooler-than-expected inflation data and a surge in AI-related stocks powered the rally.
The S&P 500 rose 0.6% to a fresh all-time high Thursday, while the tech-heavy Nasdaq Composite gained 0.9% and the Dow Jones Industrial Average added 0.1%, with all three benchmarks closing at records for a second consecutive session. The rally was fueled by April Personal Consumption Expenditures data that showed monthly core inflation rising 0.2%, below the 0.3% consensus estimate, and a decline in oil prices on optimism over US-Iran peace talks.
"The stock market will cheer the resilient consumer spending numbers, but we need to get inflation back under control and ideally do that in a way that preserves growth," Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in written commentary. "For those that are counting on a rate cut in the second half of this year, they can forget it, because this kind of data makes it increasingly unlikely that we will get one in 2026 or even for all of next year."
The information technology sector led the advance, rising 1.9%, while consumer staples lagged with a 2% decline. The S&P 500's nine-week winning streak is the longest since December 2023, with the index up roughly 5.3% in May alone. The Cboe Volatility Index, or VIX, held near 14, reflecting subdued hedging demand despite the extended rally. Trading volume on the New York Stock Exchange ran about 8% above the 20-day average, driven by post-earnings positioning and month-end rebalancing.
The nine-week run has pushed the S&P 500's valuation to levels that some strategists view as stretched. Goldman Sachs flagged two "yellow flags" in a note Tuesday — high valuations and extreme concentration — that have historically preceded bull-market peaks. The index has risen for eight consecutive weeks through May 22, and Friday's close extended that to nine, matching the longest streak since the artificial-intelligence frenzy ignited a similar run in late 2023.
Snowflake shares surged 36% after the cloud-based data platform provider reported stronger-than-expected results and announced a $6 billion artificial intelligence deal with Amazon. The rally pushed Snowflake's stock back into positive territory for the year after entering the session down 20% year-to-date. William Blair analysts described the results as a "clear inflection for AI adoption" among Snowflake's customers.
Other notable movers included Kohl's, which jumped 20% after posting its smallest comparable sales decline in four years, and Best Buy, which rose 16% on its earnings beat. Agilent Technologies gained 18% to lead the health care sector higher. On the downside, Intel fell 4.6% and Autodesk dropped 4.2% in Nasdaq 100 trading.
The monthly performance data underscores the breadth of the AI-driven rally. The semiconductor index surged 22% in May, while the AI software pioneers index jumped 27.3% and the AI winners index gained 19%. Storage chip stocks rose 37% for the month. The tech mega-cap group known as the Magnificent Seven added 6.9%, with Microsoft advancing 3.5% on Thursday alone.
Cross-asset moves reinforced the risk-on tone. The 10-year Treasury yield fell to 4.46%, down from 4.49% the prior day, as the softer core PCE reading tempered rate-hike fears. Gold rose nearly 2% to $4,530 an ounce, while the US dollar index slipped 0.2% to 99.00. Oil prices were mixed — West Texas Intermediate crude edged up 0.6% to $89.20 a barrel, while Brent crude settled 0.6% lower at $93.71 — as traders weighed the prospect of a US-Iran agreement that could reopen the Strait of Hormuz to tanker traffic.
The next major catalyst for markets arrives in mid-June with the Federal Reserve's next policy decision, where the central bank is widely expected to hold rates steady. The CME FedWatch tool shows no rate cut priced in until at least early 2027.
This article is for informational purposes only and does not constitute investment advice.
