Stock Market Surges Today, Small Cap Stocks Break Four-Year Record with New Highs
In a significant development for the tech sector, CrowdStrike Holdings (CRWD) experienced a 12.8% surge on Thursday, following a series of positive analyst comments and the unveiling of new AI agents.
Initial jobless claims fell by 33,000 last week to 231,000, indicating a steadying labour market. This economic stability, coupled with the loosening of financial conditions, is expected to benefit cyclically oriented sectors of the economy, according to Torres, senior economist at Interactive Brokers.
The rally on Wall Street was not limited to CrowdStrike. The tech stocks had a big rally, with the Nasdaq Composite adding 0.9% to 22,470, setting a new record closing high. The S&P 500 also gained 0.5% to 6,631, and the Dow Jones Industrial Average was up 0.3% at 46,142. Notably, Nvidia replaced Intel in the Dow Jones Industrial Average in November 2024.
The Russell 2000, an index of small-cap stocks, notched its first new record high in nearly four years, closing 2.5% higher at 2,467. This surge surpassed its previous all-time peak.
CrowdStrike's investor day was met with enthusiasm from analysts, who were pleasantly surprised by the company's positive comments signaling confidence in its business trajectory in coming years. Of the 54 analysts covering CrowdStrike, 34 say it's a Buy or Strong Buy, 19 have it at Hold and just one rates it at Sell. This consensus Buy recommendation is a testament to the market's optimism towards CrowdStrike.
Wedbush analyst Daniel Ives stated that CrowdStrike continues to be the 'cybersecurity gold standard'. Stifel analyst Adam Borg lifted his price target on CrowdStrike to $515 from $495, reflecting the analyst's bullish sentiment.
The positive sentiment was further bolstered by CrowdStrike's announcement of 7 new AI agents that automate repetitive and complex tasks by leveraging the Charlotte framework, their AI tool.
The tech sector's rally was not just limited to CrowdStrike. Intel's stock soared nearly 23% on news that Nvidia will invest $5 billion in the company. This investment is part of a broader deal for the co-development of data center and PC chips. The collaboration aims to tightly couple Nvidia's AI and accelerated computing stack with Intel's CPUs and the vast x86 ecosystem. However, CFRA Research analyst Angelo Zino questioned whether this expanded partnership will significantly improve Intel's data center prospects and drive earnings upside.
Despite the Fed decision, the stock market bonanza shows no signs of fatigue, according to José Torres, senior economist at Interactive Brokers. This optimistic outlook suggests that the tech sector's rally may continue in the coming days.
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