The U.S. stock market saw gains on Wednesday, primarily driven by Nvidia, the most influential stock on Wall Street. The S&P 500 rose by 0.6%, approaching its all-time high from the previous month, while the Dow Jones Industrial Average increased by 222 points, or 0.5%. The Nasdaq composite also experienced a rise of 0.8%.
Nvidia’s stock climbed 2.2% following the announcement of a long-term partnership with Meta Platforms, aimed at constructing data centers utilizing millions of Nvidia’s chips and equipment to enhance Meta’s artificial intelligence capabilities. Nvidia’s CEO, Jensen Huang, remarked on the unparalleled scale at which Meta deploys artificial intelligence (AI), solidifying Nvidia’s position as a key player in the market.
This surge underscored the potential benefits of AI development; however, concerns have also surged regarding the hefty investments made by companies like Meta and whether these expenditures will translate into substantial profits and enhanced productivity in the future. Meta’s stock did not mirror Nvidia’s success, slipping by 0.4%.
Investors are increasingly worried that successful AI tools could undermine various industries such as software and legal services, prompting a “shoot first-ask questions later” approach in the market. This mentality has led to significant stock price fluctuations for companies perceived to be at risk from these developments.
On a more positive note, several companies reporting earnings helped to bolster the market. Cadence Design Systems gained 7.2% after exceeding analysts’ expectations for both profit and revenue. CEO Anirudh Devgan emphasized the necessity of Cadence’s engineering software, despite concerns regarding AI’s potential disruption of the industry. Similarly, Analog Devices saw a rise of 2.1% after reporting record orders for its data center business, alongside beating revenue and profit estimates.
In the biotech sector, Moderna’s stock soared by 6.9% following the announcement that the Food and Drug Administration would review its flu vaccine candidate, breaking an earlier stance of inaction. However, not all companies fared well; Palo Alto Networks faced an 8.7% decline despite reporting stronger-than-expected earnings. The cybersecurity firm provided disappointing forecasts for the upcoming quarter and fiscal year.
In the bond market, Treasury yields experienced a slight uptick ahead of the anticipated release of the latest Federal Reserve meeting minutes. The yield on the 10-year Treasury rose to 4.08% from 4.05%. Although the Fed has paused cuts to interest rates, market participants expect a resumption later in the year, with speculation on the timing of such actions intensifying, especially with a new chair expected to assume leadership.
In international markets, London’s FTSE 100 climbed 1.3%, bolstered by a recent update on U.K. inflation that suggested a possible interest rate cut from the Bank of England. Japan’s Nikkei 225 was also up by 1%, following the reappointment of Prime Minister Sanae Takaichi after her ruling Liberal Democrats secured a considerable electoral victory. This development raises expectations for economic and market-supportive policies.
Overall, the trading day reflected a complex interplay of optimism fueled by strong earnings from select companies, tempered by broader concerns regarding AI’s impact and economic policy directions.
