The S&P 500 extended its winning streak to nine consecutive weeks, closing at 7,580.06 on Friday with a 0.2% gain, as Wall Street continues to set fresh records. The benchmark index advanced 1.4% for the week, while the Dow Jones Industrial Average rose 0.7% to 51,032.46 and the Nasdaq Composite added 0.2% to 26,972.62. However, the Russell 2000 slipped 0.6% to 2,919.34, signaling that the rally remains concentrated in large-cap stocks rather than broad-based.
Dell Technologies emerged as a standout performer, surging after reporting $16.1 billion in AI-server revenue for the quarter, surpassing its PC sales of $14.6 billion. The company also raised its fiscal 2027 AI-server revenue target to $60 billion, up from $50 billion. Shares of Super Micro Computer and Hewlett Packard Enterprise, both tied to AI infrastructure, jumped approximately 14%, while HP gained 10%. Melius Research analysts described the demand as unprecedented, and S&P Global Visible Alpha research head Melissa Otto noted that Dell's scale and supplier relationships give it a competitive edge.
The rally comes despite inflation remaining above the Federal Reserve's 2% target. The Personal Consumption Expenditures (PCE) index rose 0.4% in April and 3.8% year-over-year, while core PCE, excluding food and energy, increased 3.3% annually. The personal saving rate dropped to 2.6%, indicating consumers are spending more. Investors are now focused on the May jobs report, due June 5, which will provide critical clues on labor market conditions and potential Fed policy moves.
According to a Reuters poll, economists expect nonfarm payrolls to increase by 85,000 in May, with the unemployment rate holding at 4.3%. A stronger-than-expected reading could reignite fears of further rate hikes, while softer data might support the current rally. Liz Ann Sonders, chief investment strategist at Schwab, warned that strong jobs numbers combined with persistent inflation could shift Fed policy expectations. Angelo Kourkafas at Edward Jones added that payroll gains above 150,000 might stoke concerns about an overheating economy.
Broadcom is set to report earnings on Wednesday, which could reignite interest in the AI trade. The Philadelphia SE Semiconductor Index has surged about 80% since its March 30 low, with Broadcom shares climbing more than 50% in that period. The S&P 500 has gained over 19% during the same timeframe.
Despite the bullish momentum, risks remain. If inflation fails to cool, jobs data comes in too strong, or geopolitical tensions escalate, Treasury yields could rise and pressure equity markets. Chuck Carlson, CEO of Horizon Investment Services, noted that a sustained jump in rates would be the worst-case scenario for investors. For now, buyers remain in control, but next week's data will test whether the rally can broaden beyond AI and megacap tech, or if the market is becoming complacent ahead of potentially challenging data.
