Indexes end sharply higher; AI chip maker Nvidia jumps again after the bell

As if to correct for yesterday’s panic selling, today it was full speed ahead as all three indexes rose dramatically, mostly on the strength of Nvidia once again (after a one-day lapse) become The Street’s darling again, getting boosted 3.2% with an additional 9% coming in after the bell. (Please note the graph below showing this year's incredible growth for Nvidia.) The only real mystery is why was yesterday’s 174 point drop in the Dow called “slightly lower” while today’s 184 point jump was called “sharply higher.”  

They’re no longer calling the big mega-caps the FAANG group but now with the additions of Meta and Nvidia are now dubbed the Magnificent Seven. Treasury yields backed off their 16-year highs but business activity stagnated with the services sector contracting. The S&P forecast is now for marginal gains until year-end with an end note at 4496.  Awaiting Powell’s comments on Friday, volume remains well below average at about 9.9 billion. 

Indexes end sharply higher; AI chip maker Nvidia jumps again after the bell

By Caroline Valetkevitch

Wed August 23, 2023 4:52 PM

DJ: 34,288.83  -174.86        NAS: 13,505.87  +8.28         S&P: 4,387.55  -12.22      8/22

DJ: 34,472.98  +184.15       NAS: 13,721.03  +215.16     S&P: 4,436.01  +48.46     8/23

NEW YORK, Aug 23 (Reuters) - U.S. stocks ended sharply higher on Wednesday as shares of Nvidia (NVDA.O) gained ahead of quarterly results from the company whose chips are widely used for artificial intelligence (AI) computing.  Shares of Nvidia, which reported results after the closing bell, jumped 9%, extending a gain of 3.2% during the regular session.  It forecast third-quarter revenue above Wall Street targets. Other tech companies jumped in after-hours trading as well including Microsoft (MSFT.O), which was last up about 2%.  Bullish investors have been hopeful that upbeat news from Nvidia could further ear's strong rally in tech stocks. Including the session move, Nvidia's stock is up more than 220% for the year so far. 

"Not just their numbers, but what they say in the conference call about what's happening in AI is going to have a big impact on market sentiment," said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.  Nvidia is part of the so-called Magnificent Seven group of megacap stocks including Apple (AAPL.O) and Tesla (TSLA.O) that have powered the S&P 500's sharp gains this year.  During the trading session, stock investors were encouraged as the yield on the 10-year U.S. Treasury note eased from near 16-year highs after weak business activity data from the United States and the euro zone.  U.S. Federal Reserve Chair Jerome Powell's comments on Friday at the Jackson Hole conference will be scrutinized for clues on the U.S. central bank's interest rate path.

The Dow Jones Industrial Average (.DJI) rose 184.15 points, or 0.54%, to 34,472.98, the S&P 500 (.SPX) gained 48.46 points, or 1.10%, to 4,436.01 and the Nasdaq Composite (.IXIC) added 215.16 points, or 1.59%, to 13,721.03. 

    Reuters Graphics

Data showed U.S. business activity approached the stagnation point in August, with growth at its weakest since February, as demand for new business in the vast service sector contracted, while the downturn in euro zone activity was far deeper than expected.  Before the PMI data, yields on the 10-year note had been rising this month as investors were thinking the Fed could keep rates higher for longer.

According to strategists in a Reuters poll, the S&P 500 will eke out only marginal gains between now and year end, after its strong move up already this year. The index was forecast to end the year at 4,496.

Shares of drugmaker Gilead Sciences (GILD.O) rose 0.9% and Merck & Co (MRK.N) advanced 3.8% after Swiss rival Roche (ROG.S) inadvertently published positive lung cancer drug trial data.

Advancing issues outnumbered declining ones on the NYSE by a 3.74-to-1 ratio; on Nasdaq, a 2.07-to-1 ratio favored advancers.

The S&P 500 posted 8 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 46 new highs and 156 new lows. 

Per the CBOE, volume remains well below average at about 9.9 billion.