NASDAQ, S&P 500 Hit New Highs For 2023 As Tesla Rallies

On Friday, the S&P 500 experienced a modest increase but fell short of its session highs. Despite a rally in Tesla shares, the broader market failed to gather momentum as market participants awaited the Federal Reserve's policy meeting and forthcoming inflation data.

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Tesla Inc witnessed a 4.06% surge in its shares, marking its longest winning streak since January 2021. This boost followed the announcement of General Motors Co's agreement to utilize Tesla's Supercharger network. As a result, GM shares rose by 1.06%.

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Building upon the 20% rise observed on Thursday since its finishing low on October 12, the benchmark S&P 500 signaled the initiation of a new bull market, according to certain market participants. Tim Holland, Chief Investment Officer of investment platform Orion OCIO, described this bull market as potentially the most disliked in history, given the prevailing depressed sentiment going into the end of the year and the persistently bearish outlook.

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The S&P 500 gained 4.93 points or 0.11%, closing at 4,298.86. This advance contributed to a weekly increase of 0.38% and marked the fourth consecutive week of gains, the longest streak since the July-August 2022 period. Similarly, the Nasdaq Composite achieved its seventh straight week of gains, with an increase of 20.62 points or 0.16%, closing at 13,259.14 for the day and 0.13% for the week. The Dow Jones Industrial Average also rose by 43.17 points or 0.13%, reaching 33,876.78, and recording a weekly gain of 0.33%.

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Wall Street has been bolstered this year by a rally in mega cap stocks, better-than-expected earnings, and the perception that the Federal Reserve is nearing the conclusion of its cycle of interest rate hikes. These factors have provided support despite concerns over an imminent recession and persistent inflationary pressures. Following a temporary decline earlier in the week, shares of technology companies such as Apple Inc, Advanced Micro Devices, and Nvidia Corp rebounded, with gains ranging from 0.22% to 3.20%.

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Market traders, as indicated by CMEGroup's Fedwatch tool, currently estimate a 72% likelihood of the U.S. central bank maintaining interest rates within the existing 5%-5.25% range during its policy meeting on June 13-14. Rick Meckler, a partner at Cherry Lane Investments, emphasized that the market sentiment is primarily based on the belief that the Fed will pause its rate increases. Consequently, the broader market is expected to rally and potentially catch up with the large-cap tech stocks that have led the market thus far.

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This week, the release of consumer price data on Tuesday will influence expectations regarding the Fed's future actions. Traders have already priced in a 50% chance of another 25-basis-point rate hike in July.

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The CBOE Volatility index, often referred to as Wall Street's fear gauge, initially dropped to its lowest level since February 2020 before recovering slightly.

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