AI powers $5 trillion Nasdaq surge

Exchange finishes off best ever first-half of year as tech rallies

The rally in tech megacaps gained further traction, with the Nasdaq 100 notching its best ever first-half of a year as Apple Inc. hit the $3 trillion milestone.

Traders decided to look at the glass half full after data signaled inflation is moderating at the expense of economic growth. Equities extended this year's gains, with tech consolidating its leadership amid the ascent of artificial intelligence. Big banks saw their first monthly advance since January after passing the Federal Reserve's stress test. After the close, JPMorgan Chase & Co., Wells Fargo & Co. and Morgan Stanley announced higher dividends.

The S&P 500 climbed 1.2% on Friday to reach its highest level since April 2022. The Dow Jones Industrial Average rose 285 points, or 0.8%, and the Nasdaq composite jumped 1.4%.

The market has cruised through 2023 in part because the economy has been able to defy many predictions for it to fall into a recession, at least so far. The job market in particular has remained resilient despite high interest rates that slow the economy in hopes of dragging down inflation. That's helped profits for companies not fall as much as feared.

Nearly $5 trillion has been added to the value of companies in the Nasdaq 100 since the start of the year, with the tech-heavy gauge defying bubble warnings and jumping almost 40%. The advance in the most-influential group in the S&P 500 helped push the index up 16% in 2023. Gains have been even more pronounced when narrowed down to the megacap space — which has soared about 75%.

“I still do like big tech,” Larry Adam, chief investment officer at Raymond James, told Bloomberg Television. “I do believe in technology continuing to reinvent itself — obviously with the latest addition being AI. That'll continue to drive earnings.”

The “Big Seven” — including Apple, Microsoft Corp., Alphabet Inc., Amazon.com Inc., Meta Platforms Inc., Nvidia Corp. and Tesla Inc. — boosted profits by 14% a year during the decade through 2022. While their combined earnings slumped more than 20% last year, they're expected to recover swiftly.

The US equity benchmark posted its best first half since 2019. Nvidia, which has almost tri