Nasdaq, S&P 500 Hit Record Highs as Chip Stocks Surge

If you watched the Kentucky Derby this weekend, you saw Golden Tempo’s stunning surge on the final turn. He came from the back of the pack, found another gear, and crossed the finish line first.

Right now, the stock market is showing a similar kind of resilience. Equities continue to push higher, led in large part by the strength in memory chip stocks. The Nasdaq Composite ($COMPQ) and S&P 500 ($SPX) posted record closes. The S&P 600 Small-Cap Index ($SML) also notched a record close.

Technology stocks remain the market’s driving force, but the rally is broadening. Small-cap stocks are getting a boost, a sign that investors still see underlying strength in the economy despite higher oil prices. Strong earnings continue to support the upward move in the market. Intel (INTC), Sandisk (SNDK), Akamai (AKAM), Micron (MU), and Qualcomm (QCOM) saw double-digit percentage gains on Tuesday.

AMD added to the positive momentum after Tuesday’s close, reporting strong earnings and solid guidance. The stock rose in after-hours trading and has pulled back before Wednesday's open. If this strength continues into Wednesday’s regular trading session, tech stocks could be positioned for another big day.

Oil Prices Slip Slightly

Some of the optimism seems to be tied to hopes of a constructive outcome from talks between Iran and the U.S. Oil prices have moved lower ahead of Wednesday's trading session. and continued trading close to those levels after regular market hours.

Bitcoin Gains Strength

While stocks have been rising, Bitcoin has been quietly trending higher.

Since April, the cryptocurrency has been steadily rising and holding above its 21-day exponential moving average (EMA) and broke above its March high. It's now approaching its 200-day SMA, which is still sloping downward. If Bitcoin can break through this moving average, it could attract more investor interest and add fuel to Bitcoin’s recent advance.

The Bottom Line

With the Cboe Volatility Index ($VIX) hovering around 17 and equity indexes closing at record highs, the market backdrop is strongly bullish. There are still several earnings reports this week, and on Friday, we have the April nonfarm payrolls report.

A negative geopolitical headline could quickly change the narrative. Right now, however, it looks like it’ll take a huge shock to change investor sentiment. 

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.