A surge in technology stocks sparked a robust rally on Wall Street, with chip stocks basking in the limelight amidst a resolute march towards higher territories. The triumphant ascent of AI optimism underpinned the bullish tone, as all major stock indexes closed decisively in positive territory.
Performance of Leading Benchmarks
The Dow Jones Industrial Average (DJI) surged 456.87 points, marking a 1.2% climb to finish at 39,069.11. Of the 30 components in the index, 22 landed in the positive terrain while eight retreated.
The tech-heavy Nasdaq Composite catapulted 460.75 points, showing a 3% upswing to round off at 16,041.62.
Meanwhile, the S&P 500 added 105.23 points, a gain of 2.1%, closing at 5,087.03. Among the 11 sectors within the index, ten posted gains. Notably, the Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY), and the Communication Services Select Sector SPDR (XLC) surged by 3.3%, 1.9%, and 1.5%, respectively. Conversely, the Utilities Select Sector SPDR (XLU) saw a dip of 0.8%.
The CBOE Volatility Index (VIX), a barometer of market fear, receded by 5.2% to 14.54. Trade saw a robust activity of 11.9 billion shares on Thursday, surpassing the 20-session average of 11.6 billion.
Nvidia Shines Bright in Earnings Boom
NVIDIA Corporation’s stock (NVDA) soared an impressive 16.4%, reaching a historic peak following the release of its fourth-quarter fiscal 2024 earnings and optimistic guidance for the first quarter of fiscal 2025. Revenue for the fourth quarter tripled year-over-year to $22.1 billion, climbing 22% sequentially. The astounding 265% surge in total revenue from the previous year was largely fueled by the AI boom. Anticipating a revenue of $24 billion for the first quarter of fiscal 2025, NVIDIA stands above the Zacks Consensus Estimate of $21.48 billion.
Earnings for the quarter stood at $5.16 per share, surpassing the Zacks Consensus Estimate of $4.55 per share. NVIDIA distributed $99 million in dividends to shareholders and repurchased stocks worth $2.8 billion in the fourth quarter. Over the year, dividends amounted to $395 million, with stock buybacks of $9.5 billion shaping the company’s financial landscape.
The company’s stellar growth can be largely attributed to record-breaking sales in the Data Center market and increased sell-ins to partners in the Gaming and Professional Visualization sectors. The AI wave has catapulted NVIDIA to join the elite echelons of the largest U.S. corporations by market capitalization.
Although pre-earnings jitters had momentarily dampened tech sector performance on fears of overvaluation, the blockbuster earnings dispelled the concerns, ushering in a massive tech rally. This surge propelled the Dow Jones Industrial Average and the S&P 500 to historic highs, while the Nasdaq index received a substantial boost.
Notable beneficiaries of this technical upswing were Meta Platforms, Inc. (META) and Amazon.com, Inc. (AMZN), recording gains of 3.9% and 3.6%, respectively. Both companies currently hold a Zacks Rank #1 (Strong Buy).
Insight into Economic Data
According to the Labor Department’s report, initial jobless claims dwindled to 201,000, marking a 12,000 decrease for the week ending Feb 17. The four-week moving average also saw a decline to 215,250, down by 3,500 compared to the previous week.
Continuing claims stood at 1,862,000 for the week ending Feb 10, showing a reduction of 27,000 from the revised figure of the previous week. Commercial crude oil inventories in the U.S. rose by 3.5 million barrels for the week ending Feb 16, while existing home sales for January totaled 4 million units, with December’s numbers revised upward to 3.88 million units.
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