Wall Street closed at fresh all-time highs on Friday, as a rally in artificial intelligence chip stocks and a robust U.S. jobs report boosted investor sentiment. The S&P 500 advanced 0.84% to 7,398.93, while the Nasdaq Composite surged 1.71% to 26,247.08. The Dow Jones Industrial Average edged up just 0.02% to 49,609.16.
The rally comes ahead of a data-heavy week that includes the Consumer Price Index (CPI), producer prices, and retail sales. Geopolitical risks, including the Iran conflict and the anticipated meeting between President Trump and China's President Xi, also remain on investors' radar.
The April nonfarm payrolls report was the standout catalyst, with the Bureau of Labor Statistics reporting an increase of 115,000 jobs, while the unemployment rate held steady at 4.3%. "Nothing in this report to move the Fed off the sidelines" on rate cuts, said Scott Anderson, chief U.S. economist at BMO Capital Markets.
AI chip stocks led the charge. Nvidia added 1.8%, while Micron Technology and Sandisk both surged more than 15% as investors piled into data center plays. The Philadelphia SE Semiconductor Index has gained 55% so far in the second quarter. Rob Williams, chief investment strategist at Sage Advisory Services, described the environment as "an economy that seems hard to wreck," citing healthy productivity, resilient consumer spending, and robust corporate earnings.
However, the rally remains narrow, leaving risks on the table. Cloudflare plunged 24% after announcing plans to cut about 20% of its workforce and issuing weak revenue guidance for the second quarter. CoreWeave fell 11.4% after raising the lower end of its capital spending forecast due to higher component costs. Expedia dropped 9%, citing softer demand tied to the Middle East conflict.
Energy stocks remained under pressure as oil prices slipped for the week. Iran delivered its response to a U.S. proposal aimed at de-escalation, with talks focused on a short-term memorandum of understanding that would pause hostilities and keep the Strait of Hormuz open.
Interest rates also weighed on sentiment. Cleveland Fed President Beth Hammack signaled that "interest rates will be on hold for quite some time," warning that inflation expectations could become entrenched. With the market at new highs, next week's inflation data looms large.
"Earnings are the lifeblood of this rally," said Michael Arone, chief investment strategist at State Street Investment Management. Kristina Hooper at Man Group noted that markets have paid attention to "only the positive." But if core CPI comes in hotter than expected, those views could face a serious challenge.
