How to trade the market after this week's rally to record highs

Published Sat, Mar 23 20248:28 AM EDT

Wall Street had itself a very good week. The Dow Jones Industrial Average popped 2% for its biggest weekly gain of 2024. That gain drove the 30-stock benchmark to an all-time high, putting it within striking distance of 40,000. The S & P 500 and Nasdaq Composite popped 2.3% and 2.9%, respectively, to record levels. These latest gains came after the Federal Reserve indicated it remained on track to cut interest rates three times this year. Fed Chair Jerome Powell also noted that a strong labor market wouldn't deter the central bank from cutting rates. The question for investors now is: How do you navigate a market that's trading at record levels, with the bulk of the gains coming from artificial intelligence stocks? .DJI 5D mountain Dow this week Earlier this week, CNBC Pro spoke to an investor who caught the big rallies in Nvidia and Microsoft. Blair Boyer, co-head of large cap growth equity at Jennison, said he likes Advanced Micro Devices, Meta Platforms and Visa going forward — among others . Boyer broke down his investment approach, which consists of finding companies that are able to find — and fund — new ways to grow. "The self-reinforcing nature of these characteristics is such that it tends to mean that companies have the ability to use the free cash flow that they generate to reinvest in their business," Boyer said. Analysts also reiterated their bullish views on Nvidia this week, with Goldman Sachs raising its price target on the high-flying AI play to $1,000. The company unveiled its Blackwell graphics processing units on Monday. JPMorgan noted the announcement solidifies Nvidia's position in the AI space. "With leading silicon (GPU/DPU/CPU), hardware/software platforms, and a strong ecosystem, NVIDIA is well positioned to continue to benefit from major secular trends in AI, high-performance computing, gaming, and autonomous vehicles, in our view," JPMorgan wrote . NVDA 5D mountain NVDA 5-day chart Nvidia shares rose about 7% this week. Small caps? Another area that could be of interest to investors is small caps. Fundstrat's Tom Lee told CNBC he expects the Russell 2000 to rally 50% . "With the Fed doing a dovish pause, and CEOs getting more confident — that means M & A and IPOs — and people looking at other sectors, I do think the Russell can rise 50% this year," Lee said. "I think the Russell 2000 represents sort of the best of things to happen when the Fed starts cutting." The small-cap Russell 2000 rose 1.6% this week. The iShares Russell 2000 ETF tracks that index. General Electric could also present an interesting opportunity for investors. The industrial giant's power business will be spun off from its aerospace operations in the coming weeks. It will trade as GE Vernova on the New York Stock Exchange. GE has ripped higher in the lead-up to the spinoff, surging 38% this year.