Closing Market Update

Stocks Climb to Fresh All-Time Highs to Close Week

The S&P 500 and Nasdaq Composite posted record highs for second day in a row amid technology strength and easing inflation concern.

(Friday market close) Investors flipped the calendar to March and picked up where they left off from a record-setting February, sending U.S. equities to a fresh round of all-time highs Friday behind strength in technology shares and optimism over the economy and inflation. The S&P 500® index (SPX) and the Nasdaq Composite® (COMP) both hit records for the second-straight day.

Semiconductors again led the upside charge, highlighted by a 7.6% jump in Broadcom (AVGO), which is scheduled to report quarterly results Thursday. Energy company shares also posted outsized gains after WTI crude oil (/CL) futures surged almost 2% and topped $80 per barrel for the first time in four months.

According to Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research, a continued decline in Treasury yields and Thursday's favorably viewed Personal Consumption Expenditures Price Index (PCE) report continued to encourage investors. The 10-year Treasury note yield (TNX) fell near a three-week low Friday.

"Investors applauded the better-than-feared PCE data and the downtick in bond yields this week," Peterson said. "Broadly, this week's price action signals to me that the 'melt-up' mode in risk assets is still intact, and it's difficult to fight the strong uptrend, which has been in place since the beginning of November."

He cautioned that next week's jobs data-laden economic calendar, including February Nonfarm Payrolls scheduled for March 8, could lead to a pickup in volatility.

Here's where the major benchmarks ended:

  • The S&P 500 index added 40.81 points (0.8%) to 5,137.08, up 0.95% for the week and its seventh weekly gain in the past eight; the Dow Jones Industrial Average® (DJI) gained 90.99 points (0.2%) to 39,087.38, down 0.1% for the week; the Nasdaq Composite rose 183.02 points (1.1%) to 16,274.94, up 1.7% for the week.
  • The 10-year Treasury note yield fell about 7 basis points to 4.182%.
  • The CboeVolatility Index® (VIX) dropped 0.29 to 13.11.

Chipmaker strength drove a 4.3% advance in the Philadelphia Semiconductor Index (SOX), which ended at a record high. The Nasdaq-100®(NDX), which includes the Nasdaq's largest non-financial companies, also ended at a record high. Small-cap shares finished the week strong. The Russell 2000® Index (RUT) rose 1.1% to settle at a 23-month high and notched a 3% gain for the week. 

Banks were among the weakest performers as concerns over regional lenders flared up, underscored by another nosedive in shares of troubled New York Community Bancorp (NYCB).

Schwab's Peterson noted there's been "significant" money flowing into the semiconductor sector over the past two days. "It seems to me that the money is being drawn toward the areas within technology that are perceived to be the highest-quality growth, and apparently that's chip stocks," he said.

Read all our market commentary on our Insights & Education page, and you can follow us at @SchwabResearch.

Read all our market commentary on our Insights & Education page, and you can follow us at @SchwabResearch.

Stocks on the move

The following companies had stock price moves driven by analyst ratings, quarterly results, or other news:

  • Amgen (AMGN) rose 2.4% after Goldman Sachs (GS) upgraded the biotechnology company to "conviction buy" from "buy," saying the company is well positioned to add multi-billion-dollar opportunities to its portfolio through a "robust pipeline" of drugs in development. 
  • Broadcom surged to a record high near $1,400 after Bank of America (BAC) raised its price target to $1,500 from $1,250 and kept a "buy" rating on the shares.
  • Dell Technologies (DELL) rallied 32% after the computer maker's fourth-quarter results surpassed analysts' estimates behind demand for its artificial intelligence (AI) servers.
  • Hewlett Packard Enterprise (HPE) gained 2.2% after the company's quarterly earnings per share (EPS) exceeded expectations, overshadowing lighter-than-expected revenue. 
  • Daimler Truck (DTRUY) jumped 16% after the company reported a record full-year profit and said it'll buy back the equivalent of more than $2 billion of its shares. 
  • New York Community Bancorp (NYCB) tumbled 26% after the bank, in a filing with regulators late Thursday, said management has identified "material weakness in the company's internal controls." The bank also announced a new chief executive officer.
  • Spirit AeroSystems (SPR) climbed 15% following reports Boeing (BA) was in talks with Spirit to reacquire the fuselage supplier nearly 20 years after spinning it off into a separate company. Boeing shares fell 1.8%.

Next week's earnings calendar includes a few retail and technology names likely to draw investor interest. Monday brings GitLab (GTLB), whose products include AI-driven business software. Cybersecurity company CrowdStrike Holdings (CRWD) is expected to report quarterly results Tuesday, as are at least two major retailers: Nordstrom (JWN) and Target (TGT). Thursday brings another big-box retail chain: Costco Wholesale (COST). 

Most of the biggest companies managed to overshoot Wall Street profit expectations in the soon-to-conclude earnings season, though not at quite as strong a pace as previous periods. 

About 73% of S&P 500 companies reported positive EPS surprises for the previous quarter, below the five-year average of 77%, according to FactSet. About 64% of S&P 500 companies reported positive revenue surprises. S&P 500 companies are on pace to average 4% year-over-year EPS growth, well above the 1.5% increase analysts expected at the start of the season.

Jobs data ahead

The market's late-week rally was in part fueled by Thursday's PCE report, which showed a slight pickup in price pressures in January, but otherwise, met analysts' expectations. That appeared to assuage the heightened inflation worries stirred by stronger-than-expected Consumer Price Index (CPI) and Producer Price Index (PPI) reports earlier in February.

Economic news Friday was a mixed bag. The University of Michigan's final Index of Consumer Sentiment for February posted an unexpected drop, falling to 76.9 from a preliminary 78.8 and down from 79.0 in January. But the survey also noted a bright spot, saying expected business conditions "remained substantially higher" compared with last autumn.

Also Friday, the final S&P Global US Manufacturing PMI® rose to 52.2 in February up from 51.5 in January. Manufacturing conditions improved at the fastest monthly pace since July 2022, according to S&P Global.

"Manufacturing is showing encouraging signs of pulling out of the malaise that has dogged the goods-producing sector over much of the past two years," Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a report.

Firms are "investing in more staff and more equipment, laying the foundations of further production gains in the coming months to hopefully drive a stronger and more sustainable recovery of the manufacturing economy," Williamson said.

The U.S. job market assumes center stage next week, which will be capped by the Labor Department's February Nonfarm Payrolls Report next Friday. 

Job growth last month is expected to have slowed but remained firm following a surprisingly strong 353,000 jump in January payrolls. February payrolls are expected to have grown 188,000, according to Trading Economics. The Labor Department will also report its monthly Jobs Openings and Labor Turnover (JOLTS) update on Wednesday. 

Late Thursday, traders priced nearly 95% odds the fed funds target will remain unchanged at 5.25% to 5.5% following the March 19 – 20 FOMC meeting, according to the CME FedWatch Tool. The tool shows a 75% chance the fed funds rate will be unchanged after the FOMC's May meeting. 

June appears to be the top candidate for a potential Fed cut, with odds of a quarter-point reduction priced around 57%, up from 52% a week ago.

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