[New York Stock Market] Nvidia Soars Over 7%, Nasdaq Hits Another Record High... Dow Down 0.55%

NVIDIA Continues Uptrend on Strong Earnings and Stock Split Boost
April PCE Inflation Data Released on 31st in Focus

The three major indices of the U.S. New York stock market closed mixed on the first trading day of the week, the 28th (local time). The AI leader Nvidia, which posted a 'surprise earnings' last week, surged more than 7%, pushing the Nasdaq index to surpass 17,000 points for the first time ever. U.S. Treasury yields surged due to weak demand in Treasury auctions. Now, market attention is turning to the April Personal Consumption Expenditures (PCE) price index to be released this week.

Jensen Huang, CEO of NVIDIA
Photo by Yonhap News

On that day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average fell 216.73 points (0.55%) from the previous trading day to close at 38,852.86. The large-cap-focused S&P 500 index rose 1.32 points (0.02%) to close at 5,306.04. The tech-heavy Nasdaq index rose 99.09 points (0.59%) to close at 17,019.88, surpassing 17,000 points for the first time in history.

Nvidia's stock price surged 7.13%, driving the Nasdaq index to its all-time high. Nvidia continues its upward trend, supported by first-quarter earnings that exceeded market expectations and the positive effect of a stock split. GameStop surged 25.16% on news that it sold 45 million shares, generating $933 million in revenue. Apple showed strength on news that smartphone shipments in China increased 52% year-over-year last month but gave up gains to close flat.

On the other hand, Tesla fell 1.39% after a U.S. proxy advisory firm recommended shareholders vote against a $56 billion stock option grant to CEO Elon Musk scheduled for next month.

The biggest focus for investors this week is the April PCE inflation data to be released by the U.S. Department of Commerce on the 31st. After U.S. inflation showed strength earlier this year and the Consumer Price Index (CPI) inflation rate slowed last month, the key question is whether the PCE inflation will also show a slowdown.

The market expects the core PCE inflation, which excludes volatile food and energy prices and reflects the underlying inflation trend, to have risen 0.2% month-over-month and 2.8% year-over-year last month. In March, it rose 0.3% month-over-month and 2.8% year-over-year. The headline PCE inflation is expected to rise 0.3% month-over-month and 2.7% year-over-year, maintaining the same level as last month.

Marisa Baetmeier, Senior Multi-Asset Strategist at State Street Global Markets, said, "We are watching inflation data very closely right now," adding, "Investors will continue to support stocks and take on risk."

Comments from Fed officials, which provide clues about the future monetary policy path, also continued. Neel Kashkari, President of the Minneapolis Federal Reserve Bank, said he wants to see data indicating inflation easing for several months before considering a rate cut. He emphasized that if price pressures rise, he would not rule out the possibility of further rate hikes.

This week, the revised first-quarter U.S. Gross Domestic Product (GDP) will also be released. The first-quarter GDP growth rate, to be announced on the 30th, is expected to be 1.3% annualized year-over-year, lower than the preliminary estimate of 1.6%. The Fed's Beige Book, a report on economic conditions, will be released a day earlier on the 29th.

Chris Larkin, Managing Director at Morgan Stanley E-Trade, said, "This week looks to be short but busy," noting, "After last week's Federal Open Market Committee (FOMC) minutes confirmed a hawkish tone, traders will be eager to see strong data that could make it easier for the Fed to cut rates."

Due to weak demand in U.S. Treasury auctions, Treasury yields are rising. The U.S. 10-year Treasury yield, a global bond yield benchmark, rose 8 basis points (1bp = 0.01 percentage point) from the previous trading day to 4.55%, while the 2-year Treasury yield, sensitive to monetary policy, rose 2 basis points to 4.97%.

International oil prices rose. The OPEC+ (Organization of the Petroleum Exporting Countries (OPEC) members and non-OPEC allies) production cut outlook offset concerns about demand contraction due to prolonged high Fed interest rates. West Texas Intermediate (WTI) crude oil closed at $79.83 per barrel, up $2.11 (2.7%) from the previous trading day, and Brent crude, the global oil price benchmark, closed at $84.22, up $1.12 (1.4%).