Wall Street hits new closing highs on tech strength, Middle East deal hopes
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Traders working on the floor of the New York Stock Exchange on May 27, in New York City.
PHOTO: GETTY IMAGES VIA AFP
- Wall Street indexes hit record highs on May 29, with strong weekly and monthly gains, driven by renewed AI optimism and tech share performance.
- Dell surged 32.8% after raising its forecast, significantly boosting tech, but Gap shares plunged 15.4% after cutting its sales outlook.
- Inflation fears persist after April's fastest rise in three years, while Q1 GDP was revised lower. The Fed is expected to keep rates steady.
AI generated
NEW YORK - Wall Street’s main indexes hit record closing highs on ay 29 and posted weekly and monthly gains as Dell results drove tech shares higher, while investors awaited details on a potential US-Iran deal.
President Donald Trump said in a social media post that he would make a final decision on the Iran deal on May 29.
Tehran earlier said it was looking for action, not words, when it came to an agreement.
Dell surged 32.8 per cent after raising its full-year profit and revenue forecasts on May 28. The tech sector climbed 1.87 per cent, fuelled by gains in chip stocks.
Peers Hewlett Packard Enterprise and Super Micro Computer gained 12.6 per cent and 11.6 per cent respectively. Microsoft climbed 5.4 per cent.
The software services index also advanced by over 6 per cent, erasing all losses since January-end, when concerns over AI disruption had weighed on the sector.
Earlier in the session, all three indexes hit intraday record highs, cruising on renewed optimism around AI and strong earnings growth, despite concerns about the Iran war’s impact on inflation and the global economy.
The Dow Jones Industrial Average rose 363.37 points, or 0.72 per cent, to 51,032.34, the S&P 500 gained 16.44 points, or 0.22 per cent, to 7,580.07 and the Nasdaq Composite gained 55.15 points, or 0.21 per cent, to 26,972.62.
The small-cap Russell 2000 index was down 0.6 per cent.
For the week, the S&P 500 gained 1.43 per cent, the Nasdaq rose 2.39 per cent, and the Dow climbed 0.9 per cent. The Russell 2000 index rose 1.72 per cent.
For the month, since April 30, the S&P 500 gained 5.15 per cent, the Nasdaq rose 8.36 per cent, and the Dow climbed 2.78 per cent. The Russell 2000 index rose 4.24 per cent.
The S&P 500 registered its ninth consecutive weekly gain, its longest winning streak since December 2023.
Earnings-driven rally
“There’s definitely euphoric sentiment in the market around AI. The rally has really been driven by earnings,” said Mr Ohsung Kwon, chief equity strategist at Wells Fargo.
He suggested investors buy and hold AI stocks, then earn extra income by selling call options at prices much higher than the current stock price.
Ms Melissa Brown, head of investment decision research at SimCorp, said over the past few weeks volume has gone up, which suggests more people are coming into the market.
The S&P 500 communications services sector dropped, as Alphabet declined by 2.5 per cent.
Consumer staples shares were weak, with heavyweights Costco and Walmart down 3.9 per cent and 2.6 per cent respectively.
The S&P automaker index dropped after reports the Trump administration wants North American-built vehicles to have 82 per cent regional content to qualify for preferential treatment under the US-Mexico-Canada Agreement.
Shares of General Motors fell 1.3 per cent and US-listed shares of Stellantis dropped 2.7 per cent. US economic data on May 28 showed inflation increased at its fastest pace in three years in April, while GDP for the first quarter was revised lower to a 1.6 per cent annual rise.
The Fed’s Kansas City president Jeffrey Schmid warned the energy shock may not be temporary. Vice-chair for supervision Michelle Bowman said a persistent rise in inflation might require tighter monetary policy.
Money markets expect the Federal Reserve to keep interest rates steady for the rest of the year, with expectations of a 25-basis-point hike in December.
Among other movers, Gap shares tumbled 15.4 per cent after the apparel retailer cut its annual sales forecast, while American Eagle Outfitters dropped 11.8 per cent after keeping its annual comparable sales forecast unchanged.
Declining issues outnumbered advancers by a 1.04-to-1 ratio on the NYSE. There were 491 new highs and 102 new lows on the NYSE.
On the Nasdaq, 2,378 stocks rose and 2,486 fell as declining issues outnumbered advancers by a 1.05-to-1 ratio.
The S&P 500 posted 27 new 52-week highs and 12 new lows while the Nasdaq Composite recorded 125 new highs and 54 new lows.
Volume on US exchanges was 23.9 billion shares, compared with the 19.36 billion average for the full session over the last 20 trading days. REUTERS
