Nasdaq reaches historical highs with investors returning to technology

The Nasdaq reached a new all-time high during the session with a historic closing on Wednesday, marking the first time since October. This movement indicates investors returning to technology stocks and signals a renewed risk appetite after weeks of economic disruption concerns due to the war and fears regarding the impact of AI on the job market.

The Nasdaq Composite rose by 1.6% to reach a new intraday peak above 24,020 points, surpassing its previous high of 24,019.99 points set on October 29, the day Nvidia, the AI barometer, first reached a $5 trillion market capitalization. The index also exceeded its previous closing record reached on the same day.

Technology stocks had suffered heavy losses earlier in the year due to concerns over excessive valuations, the disruptive nature of artificial intelligence, and fears that the massive spending by sector giants would not yield expected returns. The AI tools launched by Anthropic in early February further heightened concerns of destabilizing traditional software publishers’ activities, creating a setback for the tech sector.

The Nasdaq had confirmed its entry into correction territory by the end of March – defined as a 10% drop from its recent peak – triggered by the conflict in the Middle East and rising oil prices fueling inflationary fears and clouding monetary policy prospects.

However, the ceasefire between the US and Iran, along with efforts to end the conflict, have since reignited risk appetite, drawing investors back to tech and AI heavyweights that propelled US stocks to record highs last year.

Semiconductor manufacturers have outperformed the overall market this year, showing some of the strongest percentage gains in the S&P 500. Among the “Big Seven,” Amazon.com has outperformed its peers, with investors showing increased confidence in its AI expansion efforts.

This surge in technology enthusiasm comes as the markets enter a new quarterly earnings season. The S&P 500’s IT sector profits are expected to rise by 46.2%, compared to the 35.8% growth anticipated earlier in the year. According to LSEG I/B/E/S data as of April 10, this would be the strongest profit growth across all sectors.