Stocks closed higher Thursday, with the S&P 500 going into record territory, driven by a broad surge in tech stocks sparked by AI chipmaker Nvidia's blowout fourth quarter earnings.
The S&P 500 gained 2.11% to close at a fresh record high 5,087.03, while the Dow Jones Industrial Average advanced 1.18% to 39,069.11 and the tech-heavy Nasdaq rose nearly 3% to 16,041.62.
Nvidia rose 16% to an all-time high after the company posted fourth-quarter profits that were up 28% from the third quarter and 486% from a year earlier.
“Today’s record-breaking stock market is due to both the future promise of AI and the record-breaking results that the poster child for AI – Nvidia – reported in the here and now,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said.
“We expect the momentum to continue and for markets to melt-up in the short run, but the story of the stock market for this year will eventually be about the economy (e.g. whether or not we go into recession) and the Federal Reserve (e.g. whether they cut interest rates or perhaps even raise them again)," he said.
In economic news, existing home sales rose 3.1% in January to 4 million units on a seasonally adjusted annualized basis, according to the National Association of Realtors. Sales were down 1.7% year over year.
“The low supply of existing homes will likely create an opportunity for homebuilders eager to meet consumer demand,” said Jeffrey Roach, Chief Economist for LPL Financial.
“As the Fed prepares for their first rate cut in years, investors should expect mortgage rates to fall by the end of this year, providing a catalyst for an improving residential real estate market later this year," Roach added.
Updated at 12:34 PM EST
Mortgage bump
U.S. mortgage costs rose for a third consecutive week, Freddie Mac said Thursday, taking the average 30-year fixed rate to 6.9%, the highest since early December.
The move followed a sharp spike higher in 10-year Treasury bond yields, which were last marked at 4.331% and are tightly-linked to home borrowing costs, following last week's stronger-than-expected January inflation report.
The avg. 30yr FRM rises to 6.90% https://t.co/K9HBh1pgw5 Chief Economist @TheSamKhater: "Strong incoming economic and inflation data has caused the market to re-evaluate the path of monetary policy, leading to higher mortgage rates."
— Freddie Mac (@FreddieMac) February 22, 2024
Updated at 11:26 AM EST
Nasdaq Leap
The tech-focused Nasdaq Composite is nearing the 16,000 point mark Thursday, with chip stocks and hyperscalers powering a 378 point, or 2.48% gain, heading into the late morning session.
Nvidia, meanwhile, continues to shine, and is on track for the biggest single-day gain, in terms of market value, in U.S. history. The shares were last marked 15.4% higher at $778.43 each.
NVIDIA $NVDA is on track to achieve the biggest single-day market cap gains in U.S. history.
— Wall St Engine (@wallstengine) February 22, 2024
Just 20 days ago, $META set this record, and now Nvidia is challenging it.
The stock has gained almost $700B in market cap this year, with today's increase alone adding $230B.… https://t.co/78BpUYbDoH pic.twitter.com/JKLsIpqWjA
Updated at 10:01 AM EST
Highs, highs and more highs
Nvidia shares are on pace for the biggest single-day gain, in terms of market value, on record as shares in the chipmaker surge 14.5% in early Thursday dealing to change hands at $772.76 each.
The stock also hit a fresh all-time high of $778.98 in the early minutes of trading and now has a market value of $1.9 trillion.
The S&P 500, meanwhile, topped its previous intra-day best and was last marked 78.6 points, or 1.58% higher at $5,060.42 points.
Related: Analysts revamp Nvidia price targets as AI hype tests $2 trillion value
Updated at 9:11 AM EST
Hot jobs data
Weekly jobless claims fell again over the period ending on February 17, with new applications for unemployment benefits pegged 12,000 lower at 201,000, well shy of the Street's 218,000 forecast.
"The only thing that’s changed in the labor market in the past few weeks is that the Fed has suggested it doesn’t need to see it weaken significantly to cut interest rates," said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley.
"That’s good, because another modest weekly jobless claims number shows employment is still humming along," he added. "But it remains to be seen if the Fed will be as relaxed about the jobs market if we continue to see a steady stream of hot economic data and rising inflation readings."
Benchmark 10-year note yields were last marked 4 basis points higher at 4.331% while 2-year notes were pegged at 4.691%.
Initial jobless claims down to 201k vs. 216k est. & 213k in prior week; continuing claims at 1.862M vs. 1.884M est. & 1.889M prior … greatest increases in KY (+3.3k), CA (+2.1k), & NV (+364); greatest decreases in MO (-3.5k), PA (-1.5k), & TX (-1.4k) pic.twitter.com/Hwj76XxlIb
— Liz Ann Sonders (@LizAnnSonders) February 22, 2024
Updated at 8:49 AM EST
Chips in
AI and chip-making stocks are getting pulled by the updraft of Nvidia's powerful revenue update, with Advanced Micro Devices (AMD) rising 6% to $174.10 each and Intel (INTC) up 2.5% in active pre-market trading.
Nvidia $NVDA almost up an entire $AMD 🔥🤯🤯 pic.twitter.com/NBLGiDUzjm
— Newtonian (@FibNewtonian) February 22, 2024
Stock Market Today
Nvidia, now the market's third-largest stock based on overall value, posted stronger-than-expected January quarter earnings of $5.16 a share, with revenue more than tripling from a year earlier to $22.1 billion.
The semiconductor group's robust near-term outlook, fueled by seemingly unending demand for AI-related technologies from megacap tech rivals, not only has the stock poised for a record at the start of trading, it also looks set to help add more than 2% to the Nasdaq at the opening bell.
Nvidia (NVDA) , dubbed "the most important stock on planet earth" by Goldman Sachs analysts, was last marked 13.2% higher in premarket trading, indicating an opening-bell price of $763.80 each.
"Nvidia’s earnings beat boosted sentiment and eased concerns over stretched valuations, providing room for the AI theme to continue to drive markets," Saxo Bank strategists wrote. "With Nvidia’s earnings result out of the way and gaining on strong outlook we expect the momentum in equities to continue in the weeks to come."
Tech-led rallies in overseas markets, tied to Nvidia's blowout earnings, also helped the Nikkei 225 in Japan reach a record 39,156.97 points Thursday, lifting the benchmark past the peak it reached in spring 1989.
The surge in tech names and the buoyant market sentiment are also offsetting a modest move higher in Treasury bond yields tied to yesterday's release of the minutes from the Federal Reserve's January policy meeting.
Investors are now expecting rate cuts to begin no earlier than June after officials "highlighted the uncertainty associated with how long a restrictive monetary policy stance would need to be maintained."
Benchmark 10-year note yields were last marked 3 basis points higher at 4.311% while 2-year notes were pegged at 4.667%.
The lack of any reference to a near-term rate hike from the January minutes, however, has the dollar index moving 0.230% lower against a basket of its global peers to 103.695.
On Wall Street, futures contracts tied to the S&P 500 suggest an opening-bell gain of around 64 points, a move that would lift the benchmark to within a point of its all-time high of 5,048.39 points.
Futures tied to the Dow Jones Industrial Average, meanwhile, are indicating a 1650 point gain with those linked to the Nasdaq primed for a 368 point surge.
In Europe, the regionwide Stoxx 600 was marked 0.8% higher in early Frankfurt trading, lead by big gains in tech, while Britain's FTSE 100 added 0.29% in London.
China stocks, alongside a big gain in Hong Kong, powered the MSCI ex-Japan index to a 1.03% gain heading into the close of trading while the Nikkei 225 ended 2.19% higher at 39,098.68 points in Tokyo.
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