All three major American stock indexes stormed to fresh all-time highs Thursday as Nvidia Corp.’s results rekindled faith that breakthroughs in artificial intelligence will boost profits and give stock prices further room to run.
The chipmaker’s blowout earnings report sparked a broad-based rally across Wall Street, sending the S&P 500 Index to its 12th record close of 2024 and leaving it up nearly 24% since late October. The Nasdaq 100 Index soared 3% while the Dow Jones Industrial Average — which is considered a proxy for US economic health — eclipsed 39,000 for the first time.
Of course, the S&P 500, the Nasdaq 100 and the Dow Jones Industrial Average have been posting simultaneous records off and on since the latter part of January — a feat that hadn’t happened since November 2021.
But the milestones drew fresh attention on Thursday, when the Dow rallied 1.1% and the 500-member index gained 2.2%. Meanwhile, the MSCI ACWI Index of both developed and emerging-market shares hit its highest level ever.
“We are seeing high-growth and high-margin tech titans break new ground in generating profits and investors are rewarding this brave new world,” said Michael Bailey, director of research at FBB Capital Partners. “All in, the new historic highs are in the right neighborhood, but perhaps investors are paying a slight premium to live in this swanky neighborhood.”
Nvidia added nearly $280 billion to its capitalization — the biggest single-session increase ever, eclipsing a $197 billion gain made by Meta Platforms Inc.’s at the start of the month. The company’s market value has increased by more than $700 billion this year alone at $1.9 trillion, eclipsing both Amazon.com Inc. and Alphabet Inc.
Nvidia’s outlook boosted other chipmakers including Advanced Micro Devices Inc., Marvell Technology Inc. and Broadcom Inc., as well as other Big Tech firms. The Philadelphia Stock Exchange Semiconductor Index — which includes bellwethers like Nvidia, Broadcom and AMD — jumped 5% for its best day since May.
Thursday’s sharp rebound follows a few turbulent sessions in the past week, highlighting just how resilient the US stock market has been by overcoming worries over weak breadth underneath the surface.
That said, the rally wasn’t as broad as bulls may have hoped. Only 73% of the S&P 500’s constituents rallied on Thursday. The last 11 times the gauge rallied more than 2% in a day, at least 90% of its members advanced. While 10 of the 11 S&P 500 sectors rallied, utilities lost 0.8%.
“It always feels the best before the hangover,” said Scott Colyer, chief executive at Advisors Asset Management. “We are well overdue for a correction since only a handful of shares are driving indexes higher. But we could still see this rally keep chugging along before a serious selloff because we still aren’t seeing more stocks hitting new lows yet.”
Stocks have climbed steadily since late last year, powered by investor expectation that the Federal Reserve will begin to cut interest rates later this year. All three major indexes have recouped all of their losses from the central bank’s aggressive interest-rate hikes to tame inflation.
The continued US economic expansion and strong corporate earnings have also helped support equities.
“The confidence level has been very sticky, you haven’t seen a lot of dispersion among traders in terms of their decision making,” said Joe Mazzola, director of trading and education at Charles Schwab & Co. “The concern around a recession has dropped pretty dramatically, and a lot of that has to do with some positive economic data.”
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