The US stock market appears to have overcome its sluggish performance and is looking for new heights. Both the Nasdaq and the S&P 500 have achieved their longest winning streak since November 2021. This recent upswing in mega-cap growth stocks can be attributed to a decline in US Treasury yields, while investors are eagerly awaiting clearer guidance on interest rates from the Federal Reserve.
The broad-based Wall Street benchmark saw a 0.3% increase, marking its seventh consecutive day of gains. The Nasdaq experienced a 0.9% climb, extending its winning streak to eight days, while the Dow Jones Industrial Average inched up by 0.2%.
This bullish trend is primarily a response to the easing of bond yields following the Federal Reserve's decision to maintain its benchmark rate after their recent meeting. The yield on the 10-year US Treasury dropped by eight basis points to 4.573%. However, investors remain vigilant about the possibility of elevated interest rates and the potential for government bond yields to surge again after declining from their 16-year highs.
Another important factor to consider is that 80% of S&P 500 companies have exceeded their earnings estimates this season, but slowing demand has resulted in only 59% surpassing revenue expectations.
The ongoing gains in the equity market, particularly driven by large-cap technology stocks and the absence of significant central bank interventions, could position the market favorably going into 2024.
Notably, the S&P 500's Microsoft (MSFT) reached a new all-time high of $360.53 per share, buoyed by optimistic growth prospects with a key partner in the field of artificial intelligence. Microsoft now boasts a market valuation of $2.7 trillion, placing it just $100 billion below Apple.
In a recent event in San Francisco, Microsoft's strategic AI partner, OpenAI, unveiled various updates, including price reductions and plans to enable individuals to create customized versions of the ChatGPT chatbot. Microsoft had also previously announced the release of an AI add-on for its Office productivity app subscriptions and a new assistant in Windows 11, both of which rely on OpenAI models.
All three major indexes are surging upward, driven by the expectation that the Federal Reserve's campaign will finally come to an end. The S&P 500 is now up 14% for the year, while the Dow has seen a more modest 3% increase. The tech-focused Nasdaq Composite has recorded an impressive 30% gain since the beginning of the year.
