Nvidia’s Surge on AI Boom Ignites Wall Street Rally in the Stock Market Today
Nvidia, the chipmaker at the forefront of the artificial intelligence (AI) revolution, continues to impress investors with its stellar performance. After reporting another blowout quarter, Nvidia’s stock price surged, triggering a rally in other technology companies and pushing Wall Street to yet another record high.
The S&P 500 rose by an impressive 2.1 percent, reaching an all-time high of 5,087.03. The Nasdaq also saw significant gains, climbing 3 percent to 16,041.62. Even the Dow Jones Industrial Average, which has a smaller weighting in tech stocks, jumped by 1.2 percent to close above 39,000 for the first time.
Nvidia’s stock price skyrocketed by 16.4 percent, leading the gains for both tech companies and the overall market. This surge comes as no surprise, considering the growing investor enthusiasm for artificial intelligence, which has propelled Nvidia’s stock to triple its value over the past year.
Other chipmakers and companies involved in the chipmaking industry also experienced positive momentum. Advanced Micro Devices (AMD) rose by 10.7 percent, while Lam Research added 4.7 percent.
The success of technology stocks has been the driving force behind the market’s rally since October. Strong earnings from major players in the sector have further justified and reinforced these gains. With investors eagerly watching the market’s trajectory, it seems that they are willing to let it take them wherever it wants to go, which, for now, is higher.
Meanwhile, Japan’s Nikkei 225 also surged to an all-time high due to record gains in corporate earnings and the weakness of the Japanese yen against the U.S. dollar.
However, not all companies experienced positive outcomes during this period. Electric truck and SUV maker Rivian tumbled by 25.6 percent after reporting another loss and issuing a weaker-than-expected production outlook. Lucid, another electric vehicle maker, also faced a setback, sliding by 16.8 percent after missing Wall Street’s sales forecast and providing a weaker production estimate than analysts had anticipated. Online craft marketplace Etsy fell by 8.4 percent after significantly missing Wall Street’s profit forecast.
In terms of earnings growth, the overall S&P 500 is expected to grow by just under 4 percent during the fourth quarter. The communication services sector, which includes Google’s parent company Alphabet, is projected to report an impressive 45 percent growth. Information technology companies, such as Nvidia, are expected to notch 22 percent growth.
“The near-term momentum in AI-related stocks is likely to continue,” says Solita Marcelli, Chief Investment Officer for the Americas at UBS Global Wealth Management, highlighting the continued confidence in the AI sector.
While nearly 90 percent of companies in the S&P 500 have already reported their earnings, there are still a few big names left to announce over the next several weeks, including Lowe’s, Dollar Tree, and Best Buy.
Wall Street has shifted its focus to earnings this week after experiencing a stumble in the market due to inflation data that exceeded expectations and a decline in retail sales. These factors raised concerns about the timing of hoped-for interest rate cuts from the Federal Reserve. As a result, investors are now betting that the central bank will start trimming its benchmark rate in June instead of March.
To gain more clarity on inflation, investors will be eagerly awaiting the government’s monthly report on personal consumption and expenditures, which is the Fed’s preferred measure. Analysts expect the report to show that inflation cooled down to 2.3 percent in January after peaking at 7.1 percent in June 2022.
Despite these uncertainties, bond yields remained relatively steady during this period. The yield on the 10-year Treasury rose slightly to 4.34 percent from 4.32 percent late Wednesday.
Nvidia’s remarkable performance, along with the broader rally in technology stocks, continues to captivate Wall Street and investors. As the AI boom shows no signs of slowing down, the future looks promising for companies at the forefront of this technological revolution.
