On Friday, the U.Sstock market exhibited a complex tapestry of performances, as the three major indices concluded their trading sessions with mixed resultsNotably, the Dow Jones Industrial Average stood out by experiencing its seventh consecutive day of declineThis streak marks the longest losing trend since 2020, echoing the caution pervading the marketLooking at the week’s overall results, the Nasdaq Composite managed a modest gain of 0.34%, trying to maintain its upward momentum amid challenging conditions; conversely, the S&P 500 plunged by 0.64%, reflecting the turbulence and volatility within the marketThe Dow, on the other hand, saw a more pronounced drop of 1.82%. In this environment, investors are increasingly focused on the Federal Reserve's monetary policy, anticipated to show signs of easing interest rate hikes, a sentiment shaping market emotions and movements.
In the realm of large technology stocks, a majority of shares appeared to be on the rise
Broadcom’s performance was nothing short of spectacular, with its stock surging over 24%, achieving a market capitalization that surpassed the trillion-dollar mark for the first timeThis landmark achievement highlights Broadcom’s formidable presence in the tech landscape and underscores market confidence in its futureFrom the beginning of the year until now, Broadcom has seen its stock price double, reflecting a staggering increase of 101.39%. This exceptional surge is largely attributed to the company’s rapid advancements in the AI sectorReports indicate that Broadcom’s AI revenue soared by 220% to reach $12.2 billion this year, and forecasts for the first quarter of fiscal year 2025 project a continuing growth of 65%. Such robust growth undoubtedly provides substantial reassurance to investorsPropelled by Broadcom’s optimistic revenue projections, Marvell Technology shares climbed nearly 11%, setting a new record high.
Moreover, news of a collaboration between Apple and Broadcom to develop AI chips has generated widespread attention in the market
This partnership promises to leverage the strengths of both companies, fostering innovation and progress in AI chip technology, which could have profound implications across the entire technology supply chainFurthermore, Taiwan Semiconductor Manufacturing Company (TSMC), a crucial player in chip fabrication, stands to benefit significantly from Broadcom’s growth and its collaboration with Apple, as it anticipates an influx of large ordersAccordingly, TSMC’s stock price followed suit with a rise of 5%. In the electric vehicle domain, Tesla’s stock price increased by over 4%, reaching a historic peakWhile earlier reports hinted at underlying dynamics, specifics have been omitted to maintain brevity; the surge in its stock price is primarily driven by Tesla’s advancements in electric vehicle technology, expansion of market share, and the flourishing state of the global electric vehicle market.
Thanks to the robust gain by Broadcom, the Nasdaq-100 index climbed for the fourth consecutive week, while the performance of other major indices remained lackluster
Outside the tech sector, the number of stocks buoying the market has dwindled, and market breadth is rapidly deteriorating.
The Nasdaq Golden Dragon Index, which tracks prominent Chinese stocks, saw a drop of 1.13% but still managed to accumulate a gain of 2.07% over the weekMany popular Chinese concept stocks faced declines, with Xiaopeng Motors falling over 3%, and other players like Li Auto, Pinduoduo, Bilibili, and JD.com each shedding over 2%. Alibaba and NIO saw declines exceeding 1%. On the brighter side, Tiger Brokers surged over 9%, while Futu Holdings achieved a rise of more than 1%.
Jay Hatfield, CEO of Infrastructure, remarked, “We seem to be trapped in this trading range, with the tech-heavy Nasdaq outpacing market averages, while small caps and the Dow struggle, until a new catalyst emerges.”
SentimentTrader's strategist referred to this phenomenon as “early cracks” in what has been a “long and strong” bull run in the U.S
stock marketIn a report to clients, they stated, “Investors have begun to hesitate.” Some Wall Street analysts, however, believe there remains considerable upside potential for U.Sequities.
Currently, the market largely expects the Federal Reserve to reduce interest rates by 25 basis points next week, a move that could further propel U.Sstocks upward.
BMO analyst Ian Lyngen stated, “The market is gearing up for the Fed’s interest rate decision, and this move is likely to be characterized as a hawkish cut.” A hawkish cut implies that while the Fed may reduce rates, future communications or actions regarding monetary policy could convey concerns about inflation, a cautious stance on economic growth prospects, or limitations on further rate cuts
Such nuanced signals from monetary policy present additional challenges and variability for the market in its interpretation and response.
Following the release of a series of mixed data points this week, swap traders have scaled back their bets on a path toward Fed easingThey currently anticipate roughly three rate cuts over the next year, down from four expected just a week agoThis shift reflects a dynamic adjustment process of market expectations regarding the Fed’s monetary policy trajectoryChanges in economic data prompt market participants to reassess the Fed's policy intentions and future direction, ultimately adjusting their investment strategies and market expectationsThis circumstance highlights the crucial interplay between market behavior and Fed policy, along with the sensitivity and volatility of market expectations.