[New York Stock Exchange] "Still Nvidia" Drives Broad Gains... S&P 500 Surpasses 6,500 for First Time Ever

Mixed Reactions to Nvidia's Earnings,
But AI Rally Outlook Revives Investor Sentiment
U.S. Q2 Growth at 3.3% on Strong Consumption and Sharp Import Decline
Focus on July PCE Inflation Data Due on the 29th

All three major indices on the New York Stock Exchange closed higher on August 28 (local time). Although initial reactions to Nvidia's earnings, announced after the previous day's market close, were mixed, investors ultimately expanded their buying, fueled by growing expectations for the artificial intelligence (AI) rally. The S&P 500 index surpassed the 6,500 mark for the first time in history.

Reuters Yonhap News

On this day, the blue-chip Dow Jones Industrial Average closed at 45,636.9, up 71.67 points (0.16%) from the previous trading day. The large-cap S&P 500 index rose 20.46 points (0.32%) to finish at 6,501.86, marking a record high for the third consecutive session. The tech-heavy Nasdaq index gained 115.019 points (0.53%) to close at 21,705.158.

By stock, Nvidia fell by 0.82%. However, other semiconductor stocks rose amid expectations that the AI boom remains intact. Broadcom and Micron climbed 2.78% and 3.61%, respectively. Apple jumped 0.9%, and Microsoft rose 0.57%.

Nvidia announced that its revenue for the second quarter of fiscal year 2026 (May to July 2025) increased by 56% year-on-year to $46.74 billion, with earnings per share (EPS) at $1.05. These figures surpassed the market research firm FactSet's consensus estimates of $46.05 billion in revenue and $1.01 in EPS. However, the company's core data center business fell short of expectations.

As a result, market assessments were divided. There was disappointment over the weak data center results and the lack of a significant earnings surprise for total revenue. However, as the results supported the continued momentum of AI investment, investor sentiment recovered.

Nvidia's conservative approach to future earnings guidance also drew a positive response. The company decided to exclude China from its future earnings forecasts. Given that the U.S. government approved the resumption of H20 sales to China at the end of July, there is speculation that future results could exceed expectations.

Major Wall Street banks such as JPMorgan, Citigroup, and Bernstein raised their target prices for Nvidia following the earnings announcement.

David Wagner, head of equities at Aptus Capital Advisors, commented, "The stock price decline is a somewhat misguided, hasty reaction and should be seen as a buying opportunity," adding, "Nvidia's quarterly revenue growth rate exceeds 50%."

The U.S. economy showed stronger-than-expected growth. According to the Bureau of Economic Analysis (BEA) under the Department of Commerce, the preliminary estimate for real gross domestic product (GDP) in the second quarter rose at an annualized rate of 3.3% compared to the previous quarter. This figure is 0.3 percentage points higher than the advance estimate (3.0%) and also exceeds the Dow Jones forecast (3.1%). Improvement in the trade balance due to decreased imports, expansion in consumer spending, and a significant increase in corporate investment all contributed to this growth.

The key remaining economic indicator this week is the July Personal Consumption Expenditures (PCE) price index, which the Department of Commerce will release on August 29. The core PCE price index, which excludes food and energy, is expected to have risen 2.9% year-on-year in July. This is higher than June's 2.8% and marks the highest level in five months.

Brett Kenwell, U.S. investment analyst at eToro, said, "If the indicator meets or falls below expectations, investors will solidify their conviction for a rate cut in September," adding, "If the indicator comes in higher than expected, it won't completely rule out the possibility of a rate cut next month, but if inflation concerns grow, sentiment on Wall Street could deteriorate."

U.S. Treasury yields are showing mixed movements. The yield on the benchmark 10-year Treasury note, a global bond market benchmark, fell 3 basis points (1bp=0.01 percentage point) from the previous day to 4.2%, while the yield on the 2-year note, which is sensitive to monetary policy, rose 1 basis point to 3.63% compared to the previous day.