The S&P 500 closed above 5,000 for the first time, gaining 1.4%. The gains were driven by the mega cap and semiconductor stocks. The Vanguard Mega Cap Growth ETF rose 2.6% on the week and the PHLX Semiconductor Index (SOX) rose 5.3%. The equal-weighted S&P 500 lagged behind with a gain of only 0.5%. Small cap stocks saw some rebound action after underperforming to start the year with the Russell 2000 jumping 2.4% last week.
The move in semiconductors was largely driven by a very well received earnings report from Arm Holdings (ARM). The chip architecture developer had only gone public last year, but has quickly become a favorite among investors attempting to get exposure to the AI thesis. Shares of ARM gained approximately 50% on Thursday.
Notably, this week’s broad advance occurred despite sharp declines in Treasuries. The 2-yr note yield rose 12 basis points to 4.50% and the 10-yr note yield rose 16 basis points to 4.19%. The increased selling in Treasuries started last week in response to ongoing strength in economic data of late that has the market repricing rate cut expectations. This also followed comments from Fed Chair Jerome Powell last weekend, who said in an interview that the Fed needs to see more evidence that inflation is moving sustainably down to its 2% target before lowering rates.