Nvidia Sparks Stock Surge, Global Markets Hit Highs

Nvidia Powers Markets to Record Highs, Other Chip Stocks Surge Stocks surged on Thursday, driven by Nvidia’s stellar earnings report, with the S&P 500 climbing over 2% and the Nasdaq Composite up nearly 3%. Nvidia’s stock skyrocketed over 16% after reporting $22 billion in sales, a 265% increase, resulting in a $277 billion market cap gain, the largest single-day increase for a stock in history according to MarketWatch.

Nvidia’s success lifted other chip stocks, with Super Micro Computer gaining 33%, Advanced Micro Devices up nearly 11%, and Micron Technology gaining over 5%. The strong performance of Nvidia and its peers reflects the market’s current focus on Artificial Intelligence (AI).

Global markets also saw significant gains, with Germany, France, Turkey, Taiwan, and Argentina all closing at record highs. Even Japanese stocks reached a new high after 34 years of challenges. This strong global performance is particularly noteworthy amidst ongoing geopolitical tensions and concerns about stubborn inflation rates.

Looking ahead, next week’s economic data releases, including Durable Goods, housing prices, consumer confidence, and the Personal Consumption Expenditures (PCE) report, could have a significant impact on interest rate expectations. These reports will be closely watched, especially regarding inflation trends and the potential for Federal Reserve rate cuts.

Inflation remains a key concern, with recent data showing a 5% increase in restaurant prices and a 1.2% rise in grocery prices. While these may seem like small numbers, they can have a substantial impact on consumers, especially considering that in 2022, consumers spent over 11% of their disposable income on food, a level not seen since 1991. Rising food prices could reduce investable assets, which is a trend worth monitoring for the markets.

In addition to economic reports, more earnings announcements are expected next week, including Macy’s and Best Buy. These reports will provide insights into consumer spending trends, particularly in relation to clothing and home electronics, amid rising food costs.

Overall, the earnings season is nearing its end, with earnings on pace to increase 3.2% year-over-year. However, the forward-looking price-to-earnings ratio is at 20.4, above its five-year and ten-year averages, indicating that stocks are extended on a fundamental valuation basis. Additionally, more companies in the S&P 500 have issued negative guidance compared to those issuing positive guidance, which could signal challenges ahead.

In premarket trading, stocks appear mixed, with Nvidia indicated to open higher by around 2% following yesterday’s gains, adding another $35 billion in market cap. While stocks have been mostly positive in recent weeks, there could be a pullback in the near future, given the extended valuations. It’s important for investors to stick with their long-term objectives and investment plans amidst market volatility.