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U.S. stocks continued their remarkable rally this week, with all three major indexes – the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite – reaching new record highs on Thursday. This positive momentum is expected to carry over into the short term.
U.S. Stocks: Market Hits New Peaks as Momentum Builds
The Dow led the surge on Thursday, climbing roughly 0.7%. The S&P 500 and Nasdaq Composite also gained ground, rising approximately 0.3% and 0.2%, respectively. This marks the fourth consecutive day of growth for these major U.S. stock indexes. Notably, the Dow is the standout performer this week, with a strong 2.8% increase, potentially its best showing since December.
Individual Stock Performances
While the overall market is bullish, individual stocks are experiencing mixed results. FedEx is a major winner, with its shares jumping 13% in premarket trading after exceeding analyst expectations in its earnings report. Conversely, Lululemon is facing an 11% drop after releasing a weaker forecast that indicates slowing growth in North America.
Reddit IPO Makes a Splash
The most talked-about event this week was Reddit’s initial public offering (IPO). The social media platform’s shares skyrocketed by 48% on their debut day. Reddit and its selling shareholders raised approximately $750 million by selling shares at $34 each. With a closing market capitalization of roughly $9.5 billion, Reddit’s IPO is a significant development for the tech IPO market.
However, it’s worth noting that Reddit’s initial valuation of $10 billion was adjusted down to $6.5 billion before the IPO. Despite a 20% increase in annual sales in 2023, Reddit still faces stiff competition from established tech and social media giants.
also read: Reddit IPO: Trade Today? Here’s What You Need to Know About eToro and Beyond
Federal Reserve’s Influence
The current market optimism is likely fueled in part by the Federal Open Market Committee’s outlook, which anticipates three interest rate cuts this year. This aligns with investor expectations and provides a sense of stability in light of recent inflation reports.
Short-Term Market Outlook
The U.S. stocks market exhibits a strong bullish trend in the short term. The momentum from Thursday’s record highs, combined with positive performances from individual stocks and favorable Federal Reserve policies, bolsters this optimistic outlook. Technically, the S&P 500 futures are poised to challenge yesterday’s record high and potentially break above key resistance levels, indicating further potential gains. However, potential downside support exists at the rising wedge pattern, which could provide a cushion in case of a market pullback.
