S&P 500, Dow surge to record closing highs as Nvidia sparks AI frenzy

It was widely predicted in the last couple days that today would be a down day with a big sell off in Nvidia given that, save a blockbuster report, investors would certainly be taking their profits even if the company beat expectations. Short-selling Nvidia was the game of the day and it’s always a great source of satisfaction when short-sellers fall on their face. That’s exactly what happened when Nvidia fooled everyone and turned in a super-blockbuster report forecasting 3x Q1 revenues and today’s stock price jumping 16.4% adding $277B to its cap, beating out even Meta and giving the short-sellers a $2.9B spanking.  

All three indexes saw huge surges with the S&P and Dow both seeing new records, the S&P its largest gain in 13 months.  The entire AI sector of course saw its own benefits and with Nvidia so thoroughly trouncing even the high expectations, “showing doubters that plenty of juice was left in the AI trade.” The S&P growth index had its biggest daily gain in 16 months. After days of caution, volume was above average at 11.93 billion. 

S&P 500, Dow surge to record closing highs as Nvidia sparks AI frenzy

By David French

Thu February 22, 2024 4:45 PM

DJ: 38,612.24  +48.44          NAS: 15,580.87  -49.91         S&P: 4,981.80  +6.29       2/21

DJ: 39,069.11  +456.87        NAS: 16,041.62  +460.75      S&P: 5,087.03  +105.23   2/22

Feb 22 (Reuters) - The S&P 500 and Dow Jones Industrial Average both surged to record closing highs on Thursday, powered by investors piling into growth and technology stocks the day after artificial intelligence poster child Nvidia's bumper earnings and outlook.  For the S&P 500 (.SPX), opens new tab benchmark, it was also the largest daily gain in 13 months. The Nasdaq Composite notched its biggest single-session advance in a year and just missed a record finish.  Investors eagerly bought stocks as Nvidia shares jumped 16.4% after the chip designer forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips and beat expectations for fourth-quarter revenue.  The company's earnings were a major test for the AI-fueled rally on Wall Street that first pushed the S&P 500 (.SPX), opens new tab above the 5,000 point mark earlier this month. Some analysts had cautioned that disappointing results could spark a steep selloff among technology stocks.

Instead, the S&P 500 (.SPX), opens new tab ended at a record high, gaining 105.23 points, or 2.11%, to 5,087.03, as did the Dow Jones Industrials (.DJI), opens new tab, which closed at 39,069.11 after rising 456.87 points, or 1.18%. It was the first time the Dow has ever finished above 39,000 points.  The Nasdaq Composite (.IXIC), opens new tab added 460.75 points, or 2.96%, to 16,041.62.

"As Nvidia goes, so goes the world," joked Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions.  He noted how Nvidia's earnings performance trounced high market expectations, showing doubters that plenty of juice was left in the AI trade after the recent rally.  "When do you sell - maybe you don't. Maybe there's still room, and I'm happy to sit and ride it out," Janasiewicz added.  Nvidia added $277 billion to its market capitalization, beating Meta Platform's $196 billion surge earlier this month as the biggest one-day gain by any company in Wall Street history.  Those shorting Nvidia stock were left nursing more than $2.9 billion of paper losses, per data from Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

The benchmark index will finish this year above the 5,000 mark, according to strategists in a Reuters poll.  All but one of the 11 major S&P 500 sectors rose, with technology stocks (.SPLRCT), opens new tab leading gains with a 4.4% increase. The outlier was utilities (.SPLRCU), opens new tab, which slipped 0.8%  The S&P 500 growth index (.IGX), opens new tab advanced 3.3%, its biggest daily percentage gain since November 2022.

Shares of other companies, seen as beneficiaries of the AI boost, also got a shot in the arm. Nvidia's rival Advanced Micro Devices (AMD.O), opens new tab, server component supplier Super Micro Computer (SMCI.O), opens new tab and Arm Holdings jumped between 4.2% and 32.9%.  Synopsys (SNPS.O), opens new tab soared 6.9%, to a record finish, after the software maker for chip designers reported estimate-beating earnings and outlook.  Also posting a record close was the Philadelphia Semiconductor index (.SOX), opens new tab, with its 5% increase its largest one-day gain since October.  Big Tech and growth stocks such as Alphabet (GOOGL.O), opens new tab, Microsoft (MSFT.O), opens new tab and Meta Platforms (META.O), opens new tab climbed between 1.1% and 3.9%.

Elsewhere, vaccine maker Moderna (MRNA.O), opens new tab jumped 13.5% after surprising investors with a fourth-quarter profit. The stock's technicals also pointed to a bullish outlook.  However, Rivian (RIVN.O), opens new tab and Lucid (LCID.O), opens new tab tumbled 25.6% and 16.8%, respectively, after the electric vehicle startups forecast 2024 production well below analyst estimates on slowdown in demand.

The volume on U.S. exchanges was 11.93 billion shares, compared with the 11.64 billion average over the last 20 trading days.