Wall Street swung higher Friday (May 24) ahead of the long Memorial Day weekend, marking a positive end to a choppy week of trading that saw the Nasdaq set a fresh record even as concerns the US Federal Reserve could keep interest rates higher for longer weighed on markets.
US stocks regained lost ground Friday to trade higher amid renewed enthusiasm for generative AI-linked companies like Nvidia, which closed up 2.6 per cent.
“We know that expectations were very high, and yet they seem to meet or exceed them on more than one level,” Tom Cahill from Ventura Wealth Management told AFP.
“So whether we like it or not, artificial intelligence now is an important factor when it comes to the stock market sentiment,” he added.
The tech-heavy Nasdaq Composite Index finished the day up 1.1 per cent, while the broad-based S&P 500 rose 0.7 per cent. The Dow Jones Industrial Average stabilised after tumbling 1.5 per cent on Thursday to close almost unchanged.
The gains in New York helped European markets recover to close the day flat or with narrow losses.
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Nvidia fuels Nasdaq’s rise
European and US indices have rallied to new records recently thanks to solid first quarter earnings by companies and their positive outlook despite ongoing fears that bumpy inflation will keep the Fed on hold for the rest of the year.
While Nvidia’s recent blockbuster earning helped propel the Nasdaq Composite to new highs this week, other markets have been hobbled by concerns that the market is now overbought.
“With earnings season largely behind us, we will now see markets following the economic data more closely, and unfortunately we look set for a protracted period of high rates if recent inflation data is anything to go by,” said Scope Markets analyst Joshua Mahony.
Other data showing the US economy is coping with high interest rates – and reducing any pressure on the Fed to cut them – has also been denting confidence that cuts are on the way.
Minutes from the Fed’s May policy decision published this week showed decision-makers wanted to keep borrowing costs elevated until they are confident prices are under control, while some even said they would be willing to hike again if needed.
Across the Atlantic Ocean, London was hit by data showing a 2.3-per cent April slump in UK retail sales, days after hotter-than-expected inflation doused chances of a Bank of England rate-reduction any time soon. AFP