The Nasdaq Composite surged to a fresh intraday record on Friday, propelled by a powerful rally in semiconductor stocks following Intel's better-than-expected second-quarter revenue forecast. The S&P 500 also advanced, but the Dow Jones Industrial Average fell, underscoring a narrow market advance concentrated in tech and chip names.
Market Movers
As of mid-session, the Nasdaq had climbed 1.50% to 24,805.83, while the S&P 500 gained 0.68% to 7,156.89, according to LSEG data. In contrast, the Dow slipped 0.33% to 49,145.83. The divergence highlights the market's reliance on a handful of high-growth stocks, with the broader index struggling amid persistent macroeconomic headwinds.
Intel Ignites Chip Sector Rally
Intel shares surged more than 20% after the chipmaker projected second-quarter revenue in the range of $13.8 billion to $14.8 billion, topping analyst estimates compiled by Reuters. The company reported first-quarter revenue of $13.6 billion, up 7% year-over-year. CEO Lip-Bu Tan attributed the strong outlook to "the next wave of AI" driving demand for Intel's central processing units (CPUs), which serve as the backbone for servers and PCs.
The Philadelphia SE Semiconductor Index jumped over 4% in late-morning trading, on track for an 18-session winning streak. Rival chipmakers AMD, Arm Holdings, and Nvidia also posted gains. The rally underscores the ongoing AI infrastructure build-out, which continues to fuel demand for both graphics processing units and advanced CPUs used in AI inference—the process that enables AI systems to respond to user prompts.
Consumer Sentiment Hits Record Low
On the economic front, the University of Michigan's consumer sentiment index tumbled to 49.8 in April, a record low. Year-ahead inflation expectations rose to 4.7% from 3.8% in March, reflecting heightened price concerns. Joanne Hsu, director of the Surveys of Consumers, noted that the Iran conflict's primary impact on households has come through "shocks to gasoline and potentially other prices."
Policy and Geopolitical Developments
In Washington, the Justice Department has dropped its investigation into Federal Reserve Chair Jerome Powell, clearing a potential obstacle for Kevin Warsh, President Donald Trump's nominee to lead the central bank. CIBC Capital Markets' FICC strategy chief Noah Buffam described Warsh as "a little bit more dovish than Powell." The move was labeled "very positive for reducing one uncertainty" by Tom Plumb, manager of the Plumb Balanced Fund.
Rate-cut expectations remain fragile. U.S. rate futures now price in a 34% probability of a rate cut by year-end, up from roughly 23% late Thursday. Traders are closely watching next week's Fed meeting for clues on inflation, interest rates, and the impending leadership transition.
Energy and Commodities
Brent crude oil edged lower by 0.43% to $104.62 per barrel, though prices remain elevated due to ongoing tensions in the Strait of Hormuz, a critical chokepoint for global oil shipments. Persistent energy costs threaten to squeeze corporate margins and could dampen consumer spending, keeping inflation risks firmly in focus.
Outlook
While the AI-driven rally has lifted the Nasdaq to new highs, the gains remain narrow and concentrated. Reported earnings so far reflect only a single month under the shadow of geopolitical turmoil, and oil prices are still well above pre-conflict levels. Societe Generale's U.S. equity strategist Manish Kabra noted that American stocks appear "more immune to the oil shock" than global peers, helping explain why the Nasdaq continues to notch records even as the Dow struggles. However, with inflation risks simmering and consumer sentiment at a low, the Fed's ability to cut rates may be more constrained than equity bulls hope.
