Nasdaq Index: Nvidia Leads Software ETF Surge as AI Trade Roars Back

Nvidia Reopened the AI Trade and Software Stocks Piled On

Nvidia closed 8.7% higher and the rest of the technology sector followed. The Nasdaq Composite gained 1.57% to 26,541.35 in its strongest session since early August. Salesforce surged 23%. CrowdStrike jumped 20.5%. Okta rallied more than 28%.

The AI trade did not just come back Thursday. It spread into the software and cybersecurity names the market had been treating as victims of the buildout. The S&P 500 information technology sector gained more than 3%, its best day in weeks. Kevin Warsh speaks Friday at Jackson Hole with yields near 4.68% and crude near $90.

The S&P 500 closed at 7,730.99, up 0.72%. The Dow added 0.2% to 53,569.44.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The Nasdaq Composite Index surged on Thursday. After gapping higher on the opening and taking out a minor swing top at 26225.83, traders continued to buy, extending the rally throughout the session.

The buying was strong enough to exceed a minor trend pivot at 26393.17 and a second minor top at 26456.78. All of this likely contributed to an unexpected jump in upside momentum.

The strong close puts the tech index in position to extend Thursday’s gains into Friday’s opening. Once the gap ending at 26662.37 is filled, the tech-weighted index could have a clear shot at the recent top at 26875.52 and an eventual retest of the all-time high at 27190.21.

Nvidia’s Forward Guide Was the Catalyst

Nvidia beat expectations and issued revenue guidance above what the street had written down. The forward view is what moved the stock. Demand for AI infrastructure is still strong. Supply is the constraint. Memory shortages are limiting how fast the industry can build and Nvidia is telling the market it could ship more if the parts existed.

The customer mix is shifting away from the concentrated hyperscaler trade that made buyers nervous. New labs, startups, regional AI companies and enterprises are placing orders now. The buyer base that was invisible a year ago is showing up in the numbers. Broadcom gained 4.5%. Intel rose 4%. SK Hynix added 2%. The VanEck Semiconductor ETF climbed 3%.

Marvell reported after the close. Its results carry more weight now because Nvidia raised the bar for every company selling into the same build.

Software Stocks Had Their Best Day in Months

Salesforce surged 23% after topping revenue expectations and raising its outlook. CrowdStrike gained 20.5% after beating estimates and raising its annual revenue forecast. Okta jumped more than 28%. Palo Alto Networks rose nearly 13%. Adobe and Autodesk gained 5.7% and 6.2%.

The market had been pricing these names as if AI tools would eat the subscription model. Thursday’s earnings said that trade was wrong. Salesforce showed its installed base is still paying. CrowdStrike and Okta showed that more AI activity creates more security needs. The companies that were supposed to be replaced are the ones posting the biggest gains.

The S&P 500 information technology sector had its best day since early August. Software catching up to semiconductors on the same session is the broadest AI bid the market has produced this quarter.

Consumer and Hardware Names Did Not Join the Party

Hormel fell 10%. Burlington Stores lost 7.5%. Best Buy dropped 4.5%. HP slipped 3% on weakness in its PC unit. Dollar General gained 2.5% after strong results and a better outlook, but the discount retailer was the exception.

The Nasdaq led Thursday with 1.57%. The Dow added 0.2%. That gap tells you where the money went. AI-related companies are getting rewarded for growth and raised forecasts. Consumer and hardware names are still being judged on margins and whether the customer is spending enough to support the next quarter. The rally was real. It was not broad.

Yields and Oil Are Still Working Against the Rate Trade

The 10-year Treasury yield finished near 4.68%, up almost three basis points. The dollar index was flat near 99.16. Jobless claims fell to 203,000. Crude climbed with WTI up 2.1% to $83.90 and Brent up 2.6% to $90.15 as the market assessed Hormuz reopening efforts.

Nvidia gave the stock market a growth catalyst Thursday. The rate market did not cooperate. Yields moving higher, oil near $90 and claims falling are the opposite of what the market needs to see if it wants the Fed to step back in September. Kansas City Fed President Jeffrey Schmid said current interest rates are not restrictive. Chicago Fed President Austan Goolsbee raised concerns about inflation as Jackson Hole opened. Two Fed officials calling for tighter policy on the same day Nvidia rallied 8.7% is the tension sitting underneath Thursday’s gains.

What to Watch

Nvidia gave the Nasdaq a catalyst. Salesforce, CrowdStrike and Okta gave software buyers a reason to come back. The AI trade is the widest it has been in months with semiconductors, software and cybersecurity all moving together on the same session. The 10-year near 4.68%, crude near $90 and two Fed officials talking tough are the other side of the trade. Warsh speaks Friday at Jackson Hole. The market wants to know whether the central bank is willing to let the Treasury buyback program ease long-term yields or whether it intends to keep pushing policy tighter.

The Nasdaq gapped higher Thursday and ran through multiple resistance levels without stopping. The strong close puts the index in position to extend gains into Friday’s opening with the recent top at 26,875.52 and the all-time high at 27,190.21 as the next targets. The consumer and hardware names that sat out Thursday’s rally are the tell on whether the bid spreads or stays concentrated in AI.

More Information in our Economic Calendar.