The U.S. stock market experienced a significant rebound on Friday, with technology stocks recovering from earlier downturns and Bitcoin stabilizing after weeks of decline. The S&P 500 index surged by 1.7%, on track for its best day since May, while the Dow Jones Industrial Average saw a remarkable increase of 1,102 points, or 2.2%, crossing the 50,000 mark for the first time. The Nasdaq composite also rose 1.9%, signaling a widespread recovery in tech sectors.
The rally was primarily driven by chip manufacturers, with Nvidia rising 7.3% and Broadcom increasing by 7.2%, effectively recovering from earlier losses. This surge in chip stocks was fueled by optimism surrounding ongoing investments in artificial intelligence (AI) technologies. For instance, Amazon announced intentions to allocate approximately $200 billion this year towards advancements in AI, chips, robotics, and satellite technology. However, Amazon’s stock saw a 7% drop amid concerns regarding whether such substantial spending would yield future profits.
Despite the day’s gains, the S&P 500 remains poised for its third weekly loss in four weeks. Concerns around significant AI investments by major tech companies, whose stocks carry substantial influence on Wall Street, persisted. Investor apprehension was compounded by worries that AI capabilities might undermine software companies’ operations, particularly following the release of free automation tools by AI firm Anthropic.
In cryptocurrency markets, Bitcoin showed signs of stabilization after a significant decline, climbing back above $70,000 after briefly dipping to around $60,000 late Thursday. Additionally, metals markets also calmed down, with gold rising by 1.8% to settle at $4,979.80 per ounce, while silver increased slightly by 0.2%. Last week’s volatility in precious metal prices had been driven by investor demand for safe-haven assets amid political uncertainties and high global debt levels.
The resurgence in Bitcoin prices positively affected related stocks. Robinhood Markets saw the largest gain in the S&P 500, rising 13.6%, while crypto trading platform Coinbase Global increased by 11.4%. Strategy, a firm focused on buying and holding Bitcoin, jumped by 24.5%.
Smaller U.S. companies also contributed to market gains, benefiting from encouraging data on consumer sentiment. A preliminary report from the University of Michigan indicated a slight improvement in sentiment, contrary to economists’ expectations for a decline. The most optimistic sentiment was reported among households holding stocks, benefiting from the S&P 500’s record-setting performance late last month. However, it was noted that sentiment remained low for consumers without stock investments.
Airline stocks surged as well, with hopes that improved consumer confidence would lead to increased travel spending. Gains included a 9.2% rise for United Airlines, 7.6% for Delta Air Lines, and 7.5% for American Airlines. Additionally, smaller stocks in the Russell 2000 index rose by 3.4%, indicating a broader market strength compared to the S&P 500.
Internationally, European indices also saw gains, despite Stellantis, the auto giant, experiencing a sharp 25.2% drop due to a massive charge related to its electric vehicle production strategy. In Asia, stock performance was mixed; while many markets declined, Japan’s Nikkei 225 rose by 0.8%, buoyed by a 2% increase for Toyota Motor following an announcement about a leadership change.
In the bond market, Treasury yields remained steady, with the yield on the 10-year Treasury holding at 4.21%. Overall, the day’s dramatic stock market movements and shifts in consumer sentiment reflected a complex interplay of factors influencing investor confidence and market performance.
