Equities Get Push From AI, Small Cap Maintain Rally – US Market Wrap
Stocks rebounded after a strong outlook from an AI bellwether revived confidence in the durability of the bull market’s main driver, while signs of economic strength continued to lift small-cap shares.
A gauge of chipmakers climbed to all-time highs after Taiwan Semiconductor Manufacturing eased concerns about the sustainability of current data-center spending. Nvidia jumped more than 2%, while ASML reached a record. Small caps extended their advance, with the Russell 2000 outperforming the S&P 500 for a 10th straight session, the longest such streak since 1990. The balance between renewed tech optimism and broader market participation is expected to remain a key theme in the weeks ahead.
A run of stronger-than-expected economic data has reinforced a sense that growth conditions are improving, prompting investors to rotate into riskier areas of the market that typically benefit in such an environment.
Bonds fell as data pointed to a resilient labor market, with jobless claims dropping to their lowest level since November. Manufacturing activity in New York state expanded, while a measure of prices received fell to near a one-year low.
Chicago Fed President Austan Goolsbee said taming inflation remains the central bank’s top priority. Separately, Kansas City Fed President Jeff Schmid said monetary policy needs to remain restrictive to curb price pressures.
The S&P 500 rose 0.3%, while the chipmakers index gained 1.8%. Sentiment was also supported by a trade deal between the US and Taiwan that includes lower tariffs and increased investment in semiconductor manufacturing. The Russell 2000 added 0.9%. Goldman Sachs raised billions of dollars through a large bond sale after reporting solid results, while Morgan Stanley’s debt banking revenue surged 93% in the fourth quarter.
The yield on 10-year Treasuries rose four basis points to 4.17%. The dollar was little changed. Oil prices fell after Trump signaled he may hold off on striking Iran for now. Silver slid following a sharp rally and after the US refrained from imposing import tariffs on critical minerals.
