Stocks surged on Wednesday, propped up by yet another NVIDIA (NVDA) rally. The AI chip leader’s market capitalization has crossed $3 trillion, surpassing that of Apple (AAPL) and making it the world’s second most valuable company after Microsoft (MSFT).
Investors flocked to NVIDIA’s stock since it posted outstanding quarterly results and guidance, amassing positions just before its 10-to-1 stock split, scheduled to take effect tomorrow. In addition, this week the leading semiconductor company announced a new series of advanced AI chips and promised to upgrade them every year, smashing competitors’ hopes of closing the gap.
The Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) led the market gains. The technology benchmarks and the S&P 500 (SPX) reached all-time highs. While the Dow Jones Industrial Average (DJIA) lagged behind other main indexes, it still ended the day in the black as well.
Stocks popped as incoming economic reports signaled continued cooling of the economy, rekindling hopes of an imminent rate cut. Significantly lower-than-expected private-sector employment numbers released yesterday followed a downward revision of first-quarter GDP and data pointing to weakening consumption and manufacturing. Meanwhile, the services sector continues to display robust health, underscoring the Fed’s difficulty in dealing with sticky inflation. Market participants are awaiting the all-important payroll report due on Friday, which could confirm or disprove the cooling-economy thesis.
In its latest meeting, the Federal Reserve’s policy committee members said that economic data didn’t give them sufficient confidence that inflation is heading towards the 2% target. As the policymakers meet next week, the latest signs of economic deceleration, while still not providing enough support for an immediate policy shift, may lead to a change of tone.
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