The Nasdaq Composite Index rose approximately 1.5% in late trading on Friday, outperforming the Dow Jones Industrial Average and the S&P 500. Despite persistent geopolitical risks, Wall Street investors continued to chase momentum stocks, particularly those in the artificial intelligence and major technology sectors.

Broad Market Performance The Dow Jones Industrial Average was largely flat in late trading, edging down about 0.1%. The S&P 500 gained 0.8%, trading near the 7393 level. The Nasdaq increased by 1.5%, trading near 26185. All three major indices are on track for weekly gains. For the week, the Nasdaq is up about 2.8%, the S&P 500 has risen about 1.5%, and the Dow has advanced about 0.2%.

Momentum Stocks Lead Gains Major technology companies maintained their strength. NVDA 3xLongSG261006 rose about 3% in late trading, bringing its weekly gain to over 10%. AMD and Broadcom increased by approximately 2% and 1.5%, respectively. Microsoft gained about 1.2%, and Alphabet, Google's parent company, rose about 0.9%. Some AI software stocks also showed active performance, with Palantir up about 5% and C3.ai up about 4%.

Energy Stocks Under Pressure Falling oil prices weighed on the energy sector. ExxonMobil declined about 2%, and Chevron fell about 1.5%. Brent crude futures traded near $101 per barrel, down about 10% for the week. Expectations of a potential peace agreement between the US and Iran have continued to rise, alleviating concerns about supply disruptions.

Market Breadth Despite the Nasdaq's significant gain, market breadth remained narrow. Approximately 55% of stocks in the S&P 500 advanced, with slightly more rising stocks than declining ones. The Russell 2000 small-cap index rose only 0.3%, far less than the gains of the major indices, indicating that capital remains highly concentrated in large technology stocks.

Analyst Perspectives The chief investment strategist at BMO Capital Markets stated that as long as the AI narrative remains unchallenged, capital will continue to flow into a select few winners. However, with market breadth contracting to such an extent, any minor disturbance could trigger significant sector rotation. Morgan Stanley advised investors to consider increasing holdings in equal-weight ETFs to diversify risk, as the current rally is highly concentrated. Should the AI theme cool, the broader market could face substantial correction pressure.

Next week, market focus will shift to the April Consumer Price Index data, which investors will use to assess inflation trends and the Federal Reserve's policy path. If inflation data exceeds expectations, it could shake the market's optimistic expectations for a rate cut before year-end, potentially triggering profit-taking in momentum stocks.