The S&P 500 and Nasdaq 100 indices soared to unprecedented levels earlier this week, driven by robust performance in the technology and semiconductor sectors. However, profit-taking in chipmaker stocks emerged toward the end of the shortened trading week, dampening earlier gains. Nvidia Corp., which had been on an eight-week winning streak, experienced a decline of over 4% for the week, subsequently impacting the broader chipmaker industry as tracked by the iShares Semiconductor ETF.
Analysts are expressing concerns about the lack of broad participation in the stock market rally and the significant concentration of major equity indices in a few mega-cap names. Despite these warnings, the market rally continues to set new records, with the S&P 500 currently experiencing its longest streak without a 2% loss since the Great Recession. The last time the S&P 500 declined by more than 2% in a single session was 377 sessions ago, on February 21, 2023.
Gilead Sciences Inc. emerged as the top-performing stock within the S&P 500 for the week. This followed the release of efficacy data for its potential HIV prevention drug, lenacapavir, which demonstrated 100% efficacy in HIV prevention for cisgender women. Additionally, oil prices rebounded above $80 per barrel, buoyed by larger-than-expected inventory declines, supporting a recovery in the energy sector stocks after two consecutive weeks of declines.
On the macro front, surveys of private sector activity in June indicated the strongest pace of expansion in two years, accompanied by welcome declines in price pressures.
In other news, economist Mohamed El-Erian highlighted Nvidia Corp.’s remarkable rise to become the world’s most valuable company, attributing it to the company’s strategic focus on graphics chips and artificial intelligence. Tesla Inc. showcased its Giga Texas expansion, which will house 50,000 Nvidia GPUs for AI projects. Furthermore, SpaceX launched “Mini” Starlink dishes that offer enhanced portability and connectivity, albeit at a higher price than initially estimated.
While the SPDR S&P 500 ETF Trust, the world’s largest exchange-traded fund, has witnessed outflows exceeding $40 billion year-to-date, these outflows were offset by significant inflows into lower-cost Vanguard and iShares S&P 500 ETFs, indicating investor preference for more cost-effective options.