S&P 500 extends winning streak to 9 weeks as hedge funds pile in

The S&P 500 rose 0.2% to 7,580.06, its ninth straight weekly gain — the longest since 2023 — as hedge funds bought stocks at the fastest pace in six months. The Dow Jones Industrial Average gained 363.49 points, or 0.7%, to 51,032.46, while the Nasdaq Composite added 55.15 points, or 0.2%, to 26,972.62. Both also closed at record highs, marking the fourth consecutive all-time high for the S&P 500.

"The rally has been largely tech-led and supported by resilient earnings, but the key question is whether it can be sustained," said Angelo Kourkafas, senior global strategist at Edward Jones.

Dell Technologies surged 32.8% to lead the S&P 500 after reporting profits that exceeded expectations and raising its outlook, citing demand for AI computing. Microsoft gained 5.4% and Broadcom added 4.7%. Technology stocks within the S&P 500 rose more than 15% in May, while most other sectors in the benchmark index lost ground. The Nasdaq 100 has gained more than 20% year-to-date.

The buying spree — driven by long purchases and short covering in index and ETF products, according to Goldman Sachs' prime brokerage desk — shows strong institutional conviction in equities even as the US war with Iran keeps oil prices elevated and inflation running at its highest in three years. The bank's trading desk told clients the trading flow was primarily driven by index and ETF product activity, with US-listed ETF short positions declining 0.6% for a second consecutive week. A measure of inflation preferred by the Federal Reserve accelerated in April to its highest level in three years, while consumer confidence has slipped as rising prices squeeze households. The Fed is expected to hold its benchmark rate steady through the year, according to CME's FedWatch tool, keeping borrowing costs elevated as traders assess whether the rally can broaden beyond technology.

Tech Leads as AI Demand Fuels Record Run

The yield on the 10-year Treasury slipped to 4.44% from 4.45% late Thursday. Brent crude for August delivery fell 1.7% to settle at $91.12 a barrel, while West Texas Intermediate for July delivery declined 1.7% to $87.36, as the US and Iran reportedly worked toward extending a ceasefire. Oil remains well above the $70 level seen before the war began in late February, with roughly a fifth of the world's oil and natural gas shipped through the Strait of Hormuz — a waterway disrupted by the conflict.

Among laggards, Paramount Skydance fell 1.9%, Amazon.com dropped 1.2% and Costco Wholesale closed 3.9% lower. US-listed ETF short positions fell for a second consecutive week, declining 0.6%, according to Goldman Sachs.

The S&P 500 closed out May with a 5.1% gain and is up 10.7% for the year. Companies in the index have reported profit growth of 28% for the most recent quarter, according to FactSet, with the overwhelming majority of results already in. That strong earnings season has helped offset concerns about inflation and geopolitical risk, though investors now face a period with fewer corporate results to drive the narrative.

This article is for informational purposes only and does not constitute investment advice.