The S&P 500 rose 5.2% in May, closing with record highs and a ninth-straight weekly gain as of Friday. The Nasdaq Composite gained 8.4% during the month. The rally was driven by information technology stocks, which surged 16% for the year, led by companies repositioning themselves for AI data center infrastructure demand. The Philadelphia Semiconductor Index rose a combined 69% in April and May, prompting JPMorgan analysts to flag overbought conditions reminiscent of the 2000 dot-com peak period.
Dell and Legacy Tech Stocks Lead May Rally
The S&P 500 is now up 10.7% for the year, with the information technology sector posting a 16% increase. Dell Technologies was the top-performing stock in the S&P 500 index, more than doubling during the month as its effort to refashion itself as a seller of servers for AI data centers gathered traction. NetApp rose 57.3% in May and 22.4% on Friday after the company reported strong quarterly results Thursday, marking the best month for the stock since February 2000. Other legacy tech stocks posted significant gains: Hewlett-Packard Enterprise rose 50% in May, Sandisk gained 55%, Cisco Systems increased 32%, and Micron Technology climbed 88% during the month.
Semiconductor Index Posts 69% Two-Month Gain
Semiconductor shares, as measured by the Philadelphia Semiconductor Index (SOX), posted a second consecutive month of astronomical gains. The SOX index rose a combined 69% in April and May. The only other two-month period when the index rose that much was in January and February 2000, just before the dot-com boom peaked in March.
JPMorgan Analysts Flag Overbought Conditions
Technical stock analysts for JPMorgan wrote Thursday that "the everything-semiconductors rally has allowed the Philadelphia Semiconductor Index to reach some of the most short- and medium-term overbought conditions since the 2000 period," noting that the "comparison raises immediate concerns about a 'bubble.'" The analysts stressed that while the recent surge in chip stocks has been extreme, the rally would have to persist for several more months "to match the extremes achieved in the late-1990s and 2000 period."
FAQ
What caused the S&P 500 to rise 5.2% in May?
The May rally was driven by information technology stocks, which gained 16% for the year, led by companies like Dell Technologies and NetApp repositioning themselves for AI data center infrastructure demand. The S&P 500 closed the month with a series of record highs and a ninth-straight weekly gain.
How did the Philadelphia Semiconductor Index perform in April and May?
The Philadelphia Semiconductor Index (SOX) rose a combined 69% in April and May. This matched the only other comparable two-month period in January and February 2000, just before the dot-com boom peaked in March.
What concerns did JPMorgan analysts raise about semiconductor stocks?
JPMorgan technical analysts wrote Thursday that the semiconductor rally has created overbought conditions similar to the 2000 period, raising concerns about a potential bubble. However, they noted the rally would need to persist for several more months to match the extremes of the late-1990s and 2000 period.
