The U.S. stock market saw significant gains on Wednesday, driven primarily by Nvidia, the most influential stock on Wall Street. The S&P 500 increased by 0.8%, nearing its all-time high set the previous month, while the Dow Jones Industrial Average climbed 285 points, or 0.6%. The Nasdaq composite outperformed with a 1.2% rise.
Nvidia’s stock rose 2.3% following an announcement of a long-term partnership with Meta Platforms, in which the tech giant will utilize millions of Nvidia chips and equipment for its artificial-intelligence data centers. Nvidia CEO Jensen Huang emphasized the scale of AI deployment at Meta, underscoring his company’s dominant position in the market. However, investors have recently expressed concern over the expenditures required for AI development and the uncertainties surrounding future profits and productivity.
Despite these worries, Meta’s stock experienced volatility, initially dropping by 1.7% before recovering to a modest gain of 0.3%. Analysts have noted that the successful implementation of AI could disrupt various industries, prompting a somewhat aggressive reaction from investors to companies perceived as vulnerable to these technological advancements.
The stock market’s positive momentum was further bolstered by several companies reporting strong earnings. Cadence Design Systems surged by 9.5% after surpassing profit and revenue expectations, with CEO Anirudh Devgan attributing this success to the vital role of their engineering software. Similarly, Analog Devices saw a 2% increase after also exceeding analysts’ estimates, citing record orders within its data center segment.
In contrast, Palo Alto Networks faced a 5.4% drop despite reporting higher-than-anticipated profits. The cybersecurity firm’s future profit forecasts did not meet analysts’ expectations, which affected investor sentiment.
In the fixed-income market, Treasury yields rose slightly in anticipation of the release of minutes from the latest Federal Reserve meeting. The yield on the 10-year Treasury note increased to 4.08%, with the consensus on Wall Street leaning towards an eventual resumption of interest rate cuts later in the year. Observers also remain mindful of the potential inflationary implications of lower interest rates.
Supporting the rise in Treasury yields were positive economic indicators. Reports highlighted an unexpected increase in industrial production, stronger orders for durable goods, and an increase in new housing starts, all contributing to speculation that the Federal Reserve may maintain its current rate strategy for a longer duration.
Internationally, London’s FTSE 100 rose by 1.2% amid expectations of potential interest rate cuts by the Bank of England following the latest inflation data. The Nikkei 225 in Japan climbed 1% as Prime Minister Sanae Takaichi was reappointed in a parliamentary election, with market expectations that she will implement economic policies to stimulate growth.
Several Asian markets were closed for the Lunar New Year holiday, contributing to a mixed global market landscape.
