US stocks surge to record high as market rebounds

Shares in the US rose to record highs on Friday, fuelled by tech stocks and rising hopes about the economy.

The S&P 500 index, which tracks shares of America's biggest companies, ended the day up 1.2% to close at 4,839.8, topping the previous record set in January 2022.

The new high means it has recovered from the tumble it took two years ago.

Then, markets were worried over inflation and how the economy would respond.

Now, as inflation eases and threats of economic downturn recede, investors have piled back into stocks.

The Dow Jones Industrial Average, which tracks firms meant to be representative of the economy, rebounded to hit its own record late last year, as optimistic investors bought up shares.

It notched another new high on Friday, rising 1% on the day.

The Nasdaq, where many tech firms are listed, surged 1.7% but remains about 4% lower than its 2021 peak.

For Wall Street, the new S&P record definitively marks out the current period, as shares recovered 35% from the October 2022 low, as one of rising share prices known as a bull market.

Investors have been cheered by hopes that the US central bank, which raised interest rates sharply in 2022 to try to cool the economy and slow price increases, is close to declaring victory and potentially starting to reverse course later this year.

That would lower borrowing costs and lift a weight on the economy, helping companies. At the same time, rate cuts would push investors away from investments tied to interest rates and towards shares, in a further boost to prices.

Tech companies have also been lifted by hopes that advances in artificial intelligence will unleash new growth.

The improvement in sentiment is also trickling out to the public, who have seen retirement and investment accounts recover, while gas prices come down and price increases in other items ease.

The University of Michigan's monthly survey of consumers, a closely tracked barometer of mood, on Friday reported that sentiment this month had risen to the highest level since 2021, up more than 21% from a year ago.

"Consumer views were supported by confidence that inflation has turned a corner and strengthening income expectations," the survey said.

"Over the last two months, sentiment has climbed a cumulative 29%, the largest two-month increase since 1991 as a recession ended."