Dow poised for fresh record as Nvidia earnings spur stock-market rally

What’s driving markets

Wall Street had seen timid trading at the start of the week as many investors feared the equity rally which took the S&P 500 index to a record close of 5029.73 last Friday was vulnerable should earnings from mega-tech AI-darling Nvidia
NVDA,
+14.80%
disappoint.

They should have had more faith.

After the close on Wednesday, the chipmaker — which by then was back down from third to fifth biggest U.S. company by market cap — delivered revenues, profits and forecasts that beat analysts already elevated expectations.

Shares of the chipmaker climbed more than 13% after the open, boosting the company’s market capitalization by more than $230 billion and leaving it on track to surpass Meta Platforms Inc.’s
META,
+3.72%
nearly $200 billion gain from earlier this month — which was the biggest one-day increase in market cap for any company in the history of the U.S. stock market.

Nvidia’s advance helped push the Nasdaq Composite to within striking distance of its first record close since November 2021. Both the Nasdaq and the S&P 500 were on track for their biggest daily advance of 2024, according to Dow Jones Market Data.

The good news from Nvidia’s much-hyped earnings report has sparked a global risk-on surge, which helped propel Japan’s and Europe’s benchmark equity barometers to new record levels.

“The impact of the Nvidia news has been worldwide. Semiconductor stocks from Japan to Europe rose, and in the U.S. everything that has the whiff of AI is rising,” said Brad Conger, deputy chief investment officer at Hirtle, Callaghan & Co., during an interview with MarketWatch. “It’s clear there’s a silicon tailwind, with everything in the semiconductor supply chain gaining.”

Nvidia’s gains helped drag other AI stocks such as Arm Holdings
ARM,
+6.50%
and Super Micro Computer
SMCI,
+18.60%
higher. Both companies’ shares were up by double digits in recent trade. Now, analysts see more room for the AI rally to continue running higher.

“So, there you go, ladies and gentlemen, a potential misstep from Nvidia that would hammer the AI rally has simply not come. What now? The rally will probably continue,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Julian Emanuel, strategist at Evercore ISI summed up the mood simply: “FOMO remains bid.”

See: Stocks can get more expensive, says strategist. Don’t get in front of FOMO for now.

Looking ahead, more companies are due to report results after the close, including Carvana
CVNA,
+2.71%,
Intuit
INTU,
+2.35%
and Live Nation Entertainment
LYV,
+2.17%
will present after the close.

U.S. economic updates on Thursday included the latest reading on weekly jobless claims, which fell to a five-week low at 201,000. S&P flash services and manufacturing PMIs for February showed the U.S. economy likely continued to expand at an above-average pace this month. Meanwhile, in January, existing-home sales rose more than 3% and climbed to their highest since August as buyers seized on lower mortgage rates.

A number of Federal Reserve officials are due to speak Thursday, as the 10-year Treasury yield
BX:TMUBMUSD10Y
trades off 1.3 basis points to 4.307%, near the top of its 12-week range. Fed Vice Chair Philip Jefferson makes comments at 10 a.m., Philadelphia Fed President Patrick Harker talks at 3:15 p.m., Fed Gov. Lisa Cook and Minneapolis Fed President Neel Kashkari both speak at 5 p.m.

Stocks to watch

• Newmont Corp.
  NEM,
  -4.13%
  saw shares slump after the miner announced plans to cut its dividend and sell off non-core assets.

• Moderna Corp.
  MRNA,
  +8.52%
  shares jumped after the company reported a surprise quarterly profit and sales that topped Wall Street’s expectations.

• Shares of Wayfair Inc.
  W,
  +4.04%
  soared Thursday after the online home-furnishings retailer reported a narrower-than-expected fourth-quarter loss and said it returned to positive active-customer growth after two years of declines.

• Planet Fitness Inc.
  PLNT,
  -2.84%
  shares declined after the company reported stronger-than-expected fourth-quarter results, but weak guidance.

• A number of stocks with exposure to the AI theme rose, including shares of Salesforce Inc.
  CRM,
  +3.02%
  and ServiceNow Inc.
  NOW,
  +4.51%.

• Companies that are part of the semiconductor supply chain also rallied, including shares of Applied Materials Inc.
  AMAT,
  +4.41%.