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US open: S&P 500 flirts with record high early on

(Sharecast News) - US stock markets rose on Friday, but gains were modest with the S&P 500 teetering at an all-time high as bond yields rose and investors digested incoming economic data. By 1002 ET, the S&P 500 was up 0.3% at 4,794.12, just a whisper away from its record-high close of 4,796.56 reached in January 2022. The Dow meanwhile gained 0.1% and the Nasdaq rose 0.4%, helped by decent gains in the tech sector.

The yield on a 10-year US Treasury was up 2.6 basis points at 4.172%, its highest level in over a month, after Atlanta Federal Reserve president Raphael Bostic warned markets not to get carried away by the prospect of early rate cuts. He predicts the central bank will cut rates sometime in the third quarter,

"Despite all the warnings and negative news on bond yields, at the time of writing, the S&P 500 is fighting hard to break resistance just above 4,800. If it can manage to do this ahead of the weekend, then the index could be on course to make its own fresh record high," said analyst David Morrison from TradeNation.

In economic data, existing-home sales fell 1% in December to 3.78m, after 0.8% growth the month before. Analysts had expected no change from 3.82m.

Meanwhile, the closely watched University of Michigan consumer sentiment index jumped to 78.8 in January from 69.7 in December, well ahead of the 70.0 reading predicted by economists.

Tech stocks rise

US-listed tech stocks were rising strongly again on the back of Thursday's fourth-quarter results from Taiwan Semiconductor Manufacturing Company (TSMC) which smashed analysts' forecasts and included guidance of a return to sales growth in the first quarter of 2024. The outlook, which included a forecast of more than 20% revenue growth for the full year, lifted sentiment among tech investors on Wall Street, with both AMD and Nvidia rising in early deals.

"With all the concern around whether Nvidia has overrun on unrealistic expectations, the continued growth in demand does serve to highlight the fact that we actually have no idea how big this market could become as AI grows in importance," said analyst Joshua Mahony from Scope Markets.

Apple was also in favour, extending gains on Thursday after Bank of America upgraded the stock to 'buy' on the back of its potential to benefit from emerging AI tech.

Super Micro Computer jumped 23% after pointing to second-quarter adjusted EPS of $5.40-.55, well above previous guidance of $4.40-4.88, due to "a strong market and end customer demand for our rack-scale, AI and Total IT Solution".

However, not all tech stocks were in favour. Roomba maker iRobot dropped by nearly 30%, following a 14% slide on Thursday, on reports that European regulators were likely to block Amazon's 2022 deal to buy the company for $1.7bn.

Wayfair surged 13% as the online home retailer announced plans to cut around 13% of its global workforce in a bid to save more than $280m. The company will axe around 1,650 employees, which includes 19% of its corporate team.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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