[New York Stock Market] Nvidia Stock Surges... Dow and S&P 500 Hit Record Highs

NVIDIA Leads Tech Stocks with 16% Surge
AI Rally Optimism Tempered by Rate Cut Retreat Outlook

The U.S. New York stock market surged across the board, fueled by a rally in Nvidia following its 'surprise earnings.' Strong economic indicators and disappointment over the central bank's signal to delay interest rate cuts did not diminish expectations for the AI rally led by Nvidia. Investors are joining the buying spree of AI stocks with optimism about tech stocks and hopes for further earnings growth.

On the 22nd (local time), the three major indices on the New York Stock Exchange (NYSE) all closed higher. The Dow Jones Industrial Average, centered on blue-chip stocks, rose 456.87 points (1.18%) to close at 39,069.11. The S&P 500, focused on large-cap stocks, ended the day up 105.23 points (2.11%) at 5,087.03. Both indices set new all-time highs. The tech-heavy Nasdaq Composite rose 460.75 points (2.96%) to close at 16,041.62, approaching its all-time closing high of 16,057.44.

Nvidia, which announced 'surprise earnings' the previous day, surged 16.4%, driving the index gains. Nvidia's market capitalization soared by $277 billion in a single day, setting a new record. This far exceeded the previous daily trading record of $197 billion set by Meta. The strong sales of the server AI semiconductor 'H100' led to a sharp increase in data center revenue, resulting in strong fourth-quarter earnings last year. Nvidia reported revenue of $22.1 billion and net income of $12.3 billion for the period, up 265% and 769% year-over-year, respectively.

With Nvidia's explosive earnings growth, market expectations for a continued tech stock rally are rising. Meta, Facebook's parent company, jumped 3.87%. Amazon rose 3.55%. Microsoft (MS) and Netflix increased by 2.35% and 2.64%, respectively.

Gerald B. Goldberg, CEO of GYL Financial Synergies, commented, "We are witnessing a perfect and positive storm of 'first movers' with 80% market share and optimistic prospects for future growth in areas that could potentially change not only technology but also how industries operate."

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

However, some voices caution against an excessive rally. Philip Kolma of MRB Partners stated, "There is a bubble in the 'Magnificent 7,' the large U.S. stocks," and warned, "Considering the cyclical nature of semiconductor stocks, the rally led by Nvidia carries inherent risks."

The economic and employment indicators released that day confirmed continued strength.

The U.S. manufacturing Purchasing Managers' Index (PMI) for February, released by S&P Global, rose to 51.5 from 50.7 last month. It exceeded the expert forecast of 50.5 and marked the highest level in 17 months. A PMI above 50 indicates economic expansion, while below 50 signals contraction. The U.S. manufacturing sector has entered an expansion phase since last month and is improving faster than market expectations this month.

The labor market also remained robust. The U.S. Department of Labor reported that initial jobless claims for the week of February 11-17 fell by 12,000 to 201,000, below the expert forecast of 217,000 and the lowest level in a month. Continuing claims, representing those receiving unemployment benefits for at least two weeks, dropped by 27,000 to 1.862 million for the week of February 4-10, also the lowest in a month.

Meanwhile, Federal Reserve officials continued to caution against premature interest rate cuts. Fed Vice Chair Philip Jefferson said, "We must always be wary of the risk of easing monetary policy too much in response to inflation improvements," adding, "Excessive easing could halt or reverse the process of restoring price stability." He emphasized, "If the economy broadly develops as expected, it would be appropriate to begin policy easing later this year."

Among individual stocks, U.S. pharmaceutical company Moderna jumped 13.5% on better-than-expected earnings. Electric vehicle maker Lucid plunged 16.8% due to weak sales of its high-end electric cars.

U.S. Treasury yields showed mixed movements. The benchmark 10-year Treasury yield, a global bond rate benchmark, fell slightly to 4.32%, while the 2-year Treasury yield, sensitive to monetary policy, edged up to 4.71%.

International oil prices rose. West Texas Intermediate (WTI) crude oil increased by $0.70 to $78.61 per barrel, and Brent crude rose $0.64 to $83.67 per barrel.