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An early advance for U.S. stocks fizzled on Friday as Nvidia surrendered most of its early gains while the Dow pushed further into record territory.

What’s happening

  • The Dow Jones Industrial Average
    DJIA
    gained 136 points, or 0.4%, to 39,207.

  • The S&P 500
    SPX
    was up by 4.5 points, or 0.1%, at 5,091 after rising as much as 0.5% earlier.

  • The Nasdaq Composite
    COMP
    shed 65 points, or 0.4%, to 15,973. after rising more than 0.5% earlier.

On Thursday, the Dow Jones Industrial Average rose 457 points, or 1.18%, to 39,069; the S&P 500 increased 105 points, or 2.11%, to 5,087, notching its 12th record close of the year so far; and the Nasdaq Composite gained 461 points, or 2.96%, to 16,042.

Even beleaguered small-caps rose, with the Russell 2000
RUT
rising 1%.

What’s driving markets

After climbing more than 4% after the open, shares of Nvidia
NVDA,
+1.18%

gave up most of its early gain as the chipmaker continued to set the tone for the broader U.S. market.

Market analysts attributed the drop in Big Tech stocks to profit taking after the S&P 500 and Nasdaq booked their best session in more than a year on Thursday, according to Dow Jones Market Data.

“Usually if there is nothing to motivate the market to further highs, you’ll have this type of trading. Being a Friday, there’s an absence of macroeconomic news, there’s not much going on and it’s giving traders a reason to perhaps take some money off the table,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

Thursday’s advance was spurred in large part by Nvidia’s blowout quarterly earnings, released after the bell on Wednesday. The chipmaker and artificial-intelligence darling briefly saw its market capitalization eclipse $2 trillion earlier on Friday.

Weakness across shares of Big Tech and semiconductor names weighed on information technology, consumer discretionary and communications services stocks. All three sectors, which have been the top performers on the S&P 500 over the past year, were trading in the red.

The only sector that was performing worse than information technology on Friday was energy, largely due to a 2% drop in U.S.-traded crude-oil futures, according to FactSet data.

Shares of Broadcom Inc.
AVGO,
-0.38%

and Advanced Micro Devices
AMD,
-3.37%

traded lower, alongside most of the Magnificent Seven stocks — Apple Inc.
AAPL,
-0.86%
,
Microsoft Corp.
MSFT,
-0.50%
,
Alphabet Inc.
GOOGL,
-0.34%
,
Amazon.com Inc.
AMZN,
-0.30%

Meta Platforms Inc.
META,
-0.06%

and Tesla Inc.
TSLA,
-1.63%

Nvidia was the only member of the elite group clinging to gains heading into midday.

As technology stocks turned lower, falling Treasury yields helped boost shares of interest-rate sensitive stocks. The utilities sector emerged as the best performing on the S&P 500 Friday, followed by financials and then consumer staples, according to FactSet data. Gains outside the technology space disproportionally benefited the Dow, which remained on track for a fresh record high on Friday.

The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was down 2 basis points at 4.31% in recent trade after the yield on the benchmark U.S. government bond touched its highest level since Nov. 30 on Thursday, according to Dow Jones Market Data. Bond yields rise as prices fall.

Nvidia’s 16% Thursday surge coincided with the largest increase in market capitalization in the history of corporate America, leaving it as the third most valuable stock in the S&P 500, now ahead of both Alphabet
GOOGL,
-0.34%

and Amazon.com
AMZN,
-0.30%
.

Looking ahead, the economic calendar for next week includes two important readings, including the second estimate of GDP growth from the fourth quarter of 2023, and the PCE inflation index for January.

The latter could pressure stocks if it comes in hotter than Wall Street expects, Cardillo said. U.S. stocks floundered last week, with the main averages snapping five-week winning streaks, after two key inflation reports came in higher than expected, forcing investors to rethink the timing of the first Federal Reserve interest rate cut of the cycle, which is expected later this year.

Companies in focus

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