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Nasdaq Index, Dow Jones, S&P 500 News: Nvidia’s Earnings Fuel Market Surge

By:
James Hyerczyk
Published: Feb 22, 2024, 15:34 UTC

Key Points:

  • Nvidia's earnings report triggers market rally, shares jump 15%
  • Nvidia surpasses Amazon and Alphabet, key in tech-led market growth
  • Nvidia's stock rise contributes a quarter of S&P 500's 4% gain
Nasdaq-100, Dow Jones, S&P 500 Index

In this article:

Nvidia’s Market Impact

Thursday’s stock market rally is being significantly influenced by Nvidia’s stellar earnings report and optimistic revenue forecast. As a key player in the AI industry, Nvidia’s performance has a substantial impact on market sentiment. The company’s shares, up about 15%, are moving the company closer to a $2 trillion market valuation. This surge reflects Nvidia’s growing dominance, with its shares tripling in 2023 and climbing nearly 40% this year.

At 15:21 GMT, the Dow Jones is trading 38872.28, up 260.04 or +0.67%. The S&P 500 Index is at 5058.29, up 76.49 or +1.54% and the Nasdaq-100 Index is trading 15941.45, up 360.58 or +2.31%.

Nvidia’s performance is part of a broader trend involving the ‘Magnificent Seven’ – a group of growth and technology stocks that have been primary market drivers. Nvidia’s rise to the third-largest U.S. company by market value, surpassing giants like Amazon and Alphabet, underscores the significant weight these tech giants hold in the market.

Market Indices and Nvidia’s Weighting

Nvidia’s soaring shares have contributed to more than a quarter of the 4% gain in the S&P 500 index, which hit a record high earlier this month. This highlights the substantial influence of individual tech giants on broader market indices.

Financial Performance and Valuation

Nvidia’s financial performance has been impressive, with revenue more than doubling to over $60 billion and net income soaring to nearly $30 billion in its latest fiscal year. Despite its surging share price, Nvidia’s forward earnings valuation has become more attractive, trading at 31 times forward earnings compared to 47 times a year ago.

Other Tech Stocks and AI Influence

Beyond Nvidia, other tech companies like Super Micro Computer and Arm Holdings have also seen their shares jump, although they’ve experienced recent pullbacks. The AI boom has not only benefited semiconductor and technology companies but has also influenced stocks across various industries.

Broader Market Movements

Other stocks making significant moves include Moderna, with shares up over 5% following better-than-expected revenue, and Lucid, which saw a pullback of over 7% after missing revenue estimates.

Economic Reports Influencing the Market

U.S. weekly jobless claims fell to 201,000, suggesting strength in the labor market. Sales of previously owned homes rose 3.1% in January, indicating a rebound in the housing market. However, the rise in mortgage rates could weigh on future market dynamics.

Business Activity and Inflation Outlook

U.S. business activity cooled in February, but there was encouraging news on inflation, with a measure of prices paid for inputs falling to the lowest level in nearly 3-1/2 years. This could alleviate concerns about rising price pressures.

Short-Term Market Forecast: Bullish

Considering Nvidia’s strong earnings, the overall positive performance of tech stocks, and encouraging economic data, the short-term forecast for the market leans towards bullish. The tech sector’s robust performance, especially Nvidia’s, is likely to continue fueling investor optimism. However, investors should remain alert to any shifts in economic indicators or global events that could influence market sentiment. The Fed should also be monitored for clues as to the timing of its first rate hike.

Technical Analysis

Daily E-mini Nasdaq-100 Index

E-mini Nasdaq-100 Index futures are trading significantly shortly after the cash market opening on Thursday. The current upside momentum has put the index in a position to change the short-term trend back to up, while placing all-time highs back on the radar.

A trade though 18026.00 will change the main trend to up. Taking out 17372.75 will signal a resumption of the downtrend.

Although the short-term trend is down, the index is still be underpinned by the 50-day moving average at 17212.70 and the 200-day moving average at 15876.73.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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