The stock market rallied last week, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all reaching new all-time highs. This surge was fueled by two key factors: expectations of Federal Reserve rate cuts and the ongoing boom in artificial intelligence (AI) technology.

Investors were buoyed by the Federal Reserve's reaffirmation of projections to cut rates three times in 2024. This dovish stance provided market participants with optimism about future economic conditions. Additionally, several notable companies in the AI sector, such as Nvidia, Broadcom, and Microsoft, had positive updates surrounding their AI initiatives, boosting investor sentiment.

Nvidia, Broadcom, and Micron Technology experienced significant gains last week, primarily due to AI tailwinds. Micron Technology especially stood out as it reported a surprise profit and provided strong guidance, attributing its success to the growing influence of AI.

While Microsoft also had a modest gain and reached new highs, it remains an attractive investment option. Furthermore, the market rally witnessed broad-based strength, with various sectors recording substantial gains. Financials, in particular, showed promising growth, with a diverse group of stocks flashing buy signals.

Several leading stocks, including Uber Technologies, Eli Lilly, and CrowdStrike Holdings, are currently setting up in consolidations, indicating potential future growth opportunities for investors. Incremental buys can still be advantageous for those looking for actionable stocks beyond the already extended AI leaders like Nvidia.

As Dow Jones futures, S&P 500 futures, and Nasdaq futures open on Sunday evening, investors eagerly await further market developments. However, it's worth noting that overnight futures activity may not always translate directly into trading during regular market sessions.

Throughout last week, major indexes displayed remarkable strength. The Dow Jones Industrial Average posted a 2% gain, while the S&P 500 rose by 2.3%. The Nasdaq Composite surged 2.85%, and the small-cap Russell 2000 climbed 1.6%, hitting a 23-month closing high before experiencing a slight pullback on Friday.

In the ETF market, the iShares Expanded Tech-Software Sector ETF (IGV) and the VanEck Vectors Semiconductor ETF (SMH) both rebounded significantly, reflecting the overall market optimism. Additionally, other sectors such as metals and mining, infrastructure development, homebuilders, and the airline industry also saw notable gains.

Looking ahead, investors are advised to approach the market with caution. While some growth ETFs, including the ARK Innovation ETF, experienced positive movements, it is essential to remain mindful of not purchasing extended stocks, even within the AI sector. Careful attention to watchlists for potential buy points and staying informed about market trends and leading stocks will be critical for making informed investment decisions.

Overall, the stock market's rally last week, driven by expectations of Fed rate cuts and AI advancements, has brought optimism to investors. However, it is essential to remain vigilant and practice prudent investing strategies in the midst of market volatility.

Disclaimer: This article does not constitute financial advice. Please consult with a professional advisor before making any investment decisions.