The Nasdaq hit a new all-time high during trading as well as a historic close on Wednesday, a first since October. This movement marks investors’ return to technology stocks and signals a renewed appetite for risk, after weeks of concerns related to economic disruptions due to the war and fears about the impact of AI on the labor market.
The Nasdaq Composite rose 1.6% to reach a new intraday peak above 24,020 points, surpassing its previous peak of 24,019.99 points set on October 29, the day when the AI barometer, Nvidia, first crossed the $5 trillion market cap mark. The index also exceeded its previous closing record achieved on the same day.
Technology stocks had suffered heavy losses earlier in the year, weighed down by concerns about excessive valuations, the disruptive nature of artificial intelligence, and fears that the massive spending by sector giants might not generate the expected returns.
The AI tools launched by Anthropic in early February further intensified fears of destabilizing traditional software publishers’ activities, creating a double setback for the technology sector.
The Nasdaq had confirmed its entry into correction territory at the end of March – defined by a 10% drop from its previous peak – when the conflict in the Middle East erupted, with the surge in oil prices fueling inflation fears and clouding monetary policy outlooks.
However, the ceasefire between the United States and Iran as well as efforts to end the conflict have since revived risk appetite, bringing investors back to tech and AI heavyweights that had propelled US stocks to record highs last year.
Semiconductor manufacturers have outperformed the overall market this year, among the strongest performers in terms of percentage gains in the S&P 500. Among the “Seven Magnificent,” Amazon.com has outperformed its peers, with investors showing increased confidence in its AI expansion efforts.
This enthusiasm for technology comes as markets approach a new earnings season. The profits of the S&P 500’s IT sector are expected to rise by 46.2%, compared to an anticipated growth of 35.8% at the beginning of the year. According to LSEG I/B/E/S data as of April 10, this would be the strongest profit growth across all sectors.
