S&P 500 Hits Record as Traders Digest Nvidia Earnings and Eye Broader Sector Gains
Stocks opened higher Thursday with the S&P 500 setting a fresh record, as investors responded to Nvidia’s earnings and the ongoing momentum in AI-related names. The tech-heavy Nasdaq also gained, while the Dow lagged slightly.
Traders appeared confident that Nvidia’s report reinforced optimism around artificial intelligence, despite some minor disappointments in the data center segment.
How Did Nvidia’s Results Stack Up Against Expectations?
Nvidia posted a 56% year-over-year revenue jump and beat Wall Street estimates, but its data center revenue came in just below expectations for the second consecutive quarter. More critically, the $54 billion revenue guidance for the current quarter narrowly topped the $53.1 billion consensus.
Shares briefly fell in after-hours trading before bouncing back and gaining around 1% in early action. Notably, the guidance excludes sales to China for its H20 chip, leaving room for potential upside if regulatory conditions improve.
Analysts including JPMorgan, Citi, and Bernstein raised their price targets, suggesting the AI rally has more room to run.
Other chip stocks such as Broadcom and Snowflake also rallied, the latter jumping 14% after a strong earnings beat and raised guidance. Meanwhile, Taiwan Semiconductor, ASML, and AMD initially dipped but began recovering as sentiment improved.
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See all NASDAQ 100 forecastsWhich Sectors Delivered the Strongest Earnings Beats?
Retail and data cloud sectors stood out. Dollar General surged 6% during the pre-market session after topping Q2 estimates and raising its full-year outlook, but failed to hold onto those gains. Five Below climbed 4% on a strong beat and upward revisions to its guidance. In contrast, Bath & Body Works fell 7% after missing on earnings, despite in-line revenue.
Best Buy topped both lines and reaffirmed its guidance, though it warned of potential tariff impacts, which kept shares under pressure. The stock has gained over 11% this month but remains down 12% year-to-date.
What’s the Broader Economic Backdrop Telling Traders?
Economic data remained supportive. Initial jobless claims ticked down to 229,000, signaling continued labor market strength. Second-quarter GDP was revised up to 3.3%, better than both the prior estimate and consensus. These figures suggest resilience in the U.S. economy even as markets brace for upcoming inflation data.
Investors are also watching political developments closely. The Trump administration’s attempt to dismiss Fed Governor Lisa Cook raised concerns about Fed independence, though markets largely brushed it off for now.
What’s the Market Outlook Heading Into Friday’s Inflation Report?
Friday’s personal consumption expenditures (PCE) report could dictate short-term direction. Economists expect a 0.2% monthly rise and 2.6% annual gain. A cooler-than-expected print may fuel more gains, while a surprise could reignite rate-hike fears.
With the AI trade still in focus and economic data holding firm, traders should prepare for potential rotations across sectors depending on Friday’s inflation read.
More Information in our Economic Calendar.
