New York Stock Market Rises on 'NVIDIA Rally'... S&P 500 Hits All-Time High

Tech Stocks Rise Alongside Nvidia
Unemployment Claims Hit Lowest in a Month

The three major indices of the U.S. New York stock market all rose in early trading on the 22nd (local time) due to the "NVIDIA rally." The S&P 500 index hit an all-time high during the session. Investor sentiment is being stimulated by expectations that the artificial intelligence (AI) rally will continue following NVIDIA's earnings surprise the previous day.

As of 9:58 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was trading at 38,977.62, up 0.95% from the previous trading day. The large-cap-focused S&P 500 index rose 1.59% to 5,061.03, and the tech-heavy Nasdaq index jumped 2.31% to 15,940.57. The S&P 500 index reached an all-time high during the session.

NVIDIA, which announced a "surprise earnings" report the previous day, surged 14.2%, leading the index gains. After the market opened, NVIDIA's market capitalization increased by more than $200 billion, surpassing the previous record of $197 billion achieved by Meta in a single day of trading. NVIDIA's strong earnings, which had previously been weighed down by stock valuation concerns, have raised expectations for a continued tech stock rally. Meta, Facebook's parent company, rose 3%, Amazon was up 2.3%, Microsoft (MS) and Netflix increased by 2.1% and 1.5%, respectively.

In its earnings report released after the market closed the previous day, NVIDIA announced that its revenue for the fourth quarter of last year (November last year to January this year) was $22.1 billion, and net income was $12.3 billion, representing increases of 265% and 769%, respectively, compared to the same period last year. Adjusted earnings per share (EPS) were $5.16. These figures significantly exceeded market expectations compiled by FactSet (revenue of $20.4 billion, adjusted EPS of $4.59). Sales of the server AI semiconductor 'H100' drove data center revenue to surge 409% year-over-year, fueling NVIDIA's earnings growth.

Jensen Huang, CEO of NVIDIA, stated, "Accelerated computing and generative AI have reached a 'tipping point,' and demand is surging globally across companies, industries, and countries."

Treyt Station, Global Head of Market Strategy, said, "Bearish investors attacked NVIDIA, but there is little bad news in this (earnings) report," adding, "With AI investments expected over the next several years, there is potential for significant growth."

Solita Marcelli of UBS Global Asset Management said, "The short-term momentum of AI-related stocks will continue," and added, "We maintain a preference for semiconductors and software. We see opportunities among beneficiaries such as AI computing, big tech companies, and their partners."

NVIDIA's surprise earnings also offset cautious views on interest rate cuts reaffirmed in the minutes of the January Federal Open Market Committee (FOMC) meeting released the previous day, supporting the indices.

According to the January FOMC minutes released by the Federal Reserve (Fed), members expressed a cautious stance that current interest rates should be maintained until inflation clearly slows down. The minutes stated, "Most participants noted that moving too quickly to ease monetary policy is risky," and emphasized the importance of carefully evaluating incoming data to determine whether inflation is sustainably declining to 2%. Only two members warned about the risks of restrictive monetary policy.

The labor market remains strong. According to the U.S. Department of Labor on the day, initial jobless claims for the week of February 11?17 fell by 12,000 from the previous week to 201,000. This was below the expert forecast of 217,000 and marked the lowest level in a month. Continuing claims for unemployment benefits, which require at least two weeks of claims, were 1,862,000 for the week of February 4?10, also the lowest in a month, down 27,000 from the previous week. Despite ongoing layoffs in large companies including the tech sector, the U.S. labor market continues to show strength.

By stock, U.S. pharmaceutical company Moderna rose 8.3% on earnings that exceeded expectations. Electric vehicle maker Lucid fell more than 12% due to weak sales of high-end electric vehicles.

Government bond yields showed mixed movements. The yield on the U.S. 10-year Treasury note, a global bond yield benchmark, slightly declined to 4.3%, while the 2-year Treasury note yield, sensitive to monetary policy, edged up to around 4.67%.

International oil prices declined on news of progress in hostage negotiations between Israel and the Palestinian militant group Hamas. West Texas Intermediate (WTI) crude fell $0.47 (0.6%) to $77.44 per barrel, and Brent crude dropped $0.53 (0.64%) to $82.50 per barrel.