Dow Jones and S&P500: Cisco Earnings Drive New Highs, Nvidia Lift Tech Stocks Today

Cisco and Nvidia Push the Dow Back Above 50,000 as AI Spending Keeps Running

The Dow climbed more than 300 points Thursday and crossed back above 50,000. Cisco Systems did most of the work. Nvidia helped. The S&P 500 hit a new record at 7491.16 by mid-afternoon and the Nasdaq added to Wednesday’s gains. Strong earnings and fresh optimism around U.S.-China relations gave investors a reason to stay long in a market that keeps making the bears look wrong.

S&P 500 Index Technical Analysis

The S&P 500 Index uptrend continued on Thursday after taking out yesterday’s high, reaching a new record at 7491.16 by 14:45 GMT. The momentum was strong on that move so it’s highly likely we’ll see more new highs before the close.

There is no upside target at this time and those trading using overbought indicators are getting burned while feeding the bull. I want to emphasize again that trying to pick a top in this phase of the bull market is both expensive and dangerous. If you feel the need to play the short side then consider waiting for a closing price reversal top or some other sign of weakness that may give you the slightest edge.

The nearest support is a minor pivot at 7414.85. This is followed by a minor swing bottom at 7338.54. Taking out this level will shift momentum to the downside. However, keep in mind that three support levels are just under this level at 7332.64, 7299.51 and 7268.86.

The dangerous part about shorting weakness is that the main trend is up and that buyers have been buying dips.

A good top doesn’t just happen, it forms. So while the market may appear to be overbought by some metrics, it’s still just a guess whether a major top is forming.

One concern I have about the rally is the breadth. I’m not impressed that the rally is being controlled by just one or two major sectors like semiconductors, but I’m not going to argue at the results. When this rally finally stops, I think it will correct the same way it rallied. Semiconductors will lead the way down.

Cisco Did What It Needed To Do

Up roughly 15% on the session and it earned every point. Earnings beat, guidance beat, and the forward outlook was strong enough to pull the entire Dow with it. The job cuts are part of a restructuring that has been in progress and the market is not treating that as a red flag. It is treating it as discipline. When a company of Cisco’s size posts numbers that far above estimates and guides higher on top of that, the stock does not wait for anyone to catch up. It gaps and holds and Thursday it held.

Amazon and Nvidia have been running alongside Cisco for the past two months and that combination is doing most of the work inside the indexes. The way I see it the AI infrastructure trade is not slowing down. It is just rotating between names. When Cisco moves like this it confirms the spending cycle is broader than just the chip stocks and that is what gave the rest of the market permission to follow Thursday.

Nvidia Gets Another Catalyst

Reuters reported Thursday that the U.S. approved sales of Nvidia’s H200 AI chip to roughly 10 Chinese firms. Deliveries have not started yet but the approval alone was enough. Nvidia added more than 2% on the session. I’ve watched this stock find reasons to move higher for two years and the pattern has not changed. Every regulatory development, every approval, every new customer announcement gets bought. The demand story is still running ahead of supply and traders are not waiting for that gap to close before adding exposure.

The broader semiconductor trade stays intact on the back of that news. The argument that chipmakers are undervalued because earnings growth is supporting the rally rather than speculation is the right frame for this market right now. Valuations that look stretched on a price basis look different when the earnings revisions keep moving in the right direction.

Economic Data

April retail sales came in at 0.5%, matching expectations. Strip out autos and the number rises to 0.7%. I want to be direct about the composition of that beat. Gas station sales jumped 2.8%, the largest gain of any retail category. Higher energy prices inflating a retail number is not the same as broad consumer strength. The underlying demand picture is more moderate than the headline suggests.

Jobless claims came in at 211,000, slightly above estimates and up from the prior week. Continuing claims moved higher too. The labor market is not breaking but it is not as tight as it was. The Federal Reserve is watching both of those numbers and so am I.

Stocks in the News

Yeti Holdings jumped 10% after beating on earnings and revenue. StubHub gained 14% on stronger than expected quarterly revenue. Klarna rallied 16% after posting revenue above forecasts and reporting positive operating income. Biogen rose 4% after its experimental Alzheimer’s drug moved into a phase 3 trial.

On the downside, Doximity dropped 23% after weak guidance for the current quarter and full fiscal year. Bullish fell 9% after missing estimates on both revenue and profit.

What to Watch

Trump and Xi discussed the Iran conflict at a summit Thursday and both sides agreed the Strait of Hormuz must stay open. That statement matters for energy prices and energy prices matter for this rally. Elevated crude costs are already pressuring some sectors and any escalation that pushes oil higher gives traders sitting on big gains a reason to start reducing exposure.

The S&P 500 is at a record. The breadth is narrow. Semiconductors are doing most of the work and when that leadership cracks it will not crack slowly. Watch the Strait, watch crude, and watch whether the earnings momentum from names like Cisco and Nvidia can pull more of the market along with it next week.

More Information in our Economic Calendar.