Closing Market Update

Stocks Soar to Record Highs as Nvidia Delivers

The S&P 500 index and Dow Jones Industrial Average hit new high-water marks after Nvidia results exceeded expectations.

(Thursday market close) The S&P 500® index (SPX) and the Dow Jones Industrial Average® (DJI) rocketed to fresh record highs Thursday after semiconductor bellwether Nvidia (NVDA) reported stronger-than-expected quarterly results, fueling renewed buying across the technology sector. The Nasdaq Composite® (COMP) vaulted above 16,000 to post its highest close since November 2021.

Nvidia shares soared more than 16% and hit a record high above $781 one day after reporting earnings per share of $5.16 and a 265% year-over-year surge in revenue to $22.1 billion, far-above Wall Street forecasts. The company led the S&P 500 in 2023 with a gain of 239% and is up another 58% so far this year behind escalating bullishness over demand for high-end graphics processing units and other types of chips capable of serving advanced artificial intelligence.

The last of the so-called Magnificent Seven mega-cap companies to report this earnings season, Nvidia helped propel stock markets in Japan and Europe to all-time highs, according to Kevin Hincks, host of Schwab Network's "Fast Market." This also raises a "now what" sort of question for investors, Hincks added. 

"Nvidia delivered," Hincks said. "Now, the market is trying to figure out what to do 'post-Nvidia.' Is today's event the catalyst to even higher stock prices, or will we look back at this as the day we put in the short-term highs?"

A strengthening trend in the current earnings season suggests the market is retaining solid fundamental underpinnings, for now. "Treasury yields are creeping higher, which should work against higher equity prices, but individual stock earnings are taking over the narrative," Hincks explained.

Here's where the major benchmarks ended:

  • The S&P 500 index rose 105.23 points (2.1%) to 5,087.03; the Dow Jones Industrial Average gained 456.87 points (1.2%) to 39,069.11; the Nasdaq Composite rallied 460.75 points (3%) to 16,041.62.
  • The 10-year Treasury note yield (TNX) was little changed at 4.323%.
  • The Cboe Volatility Index® (VIX) fell 0.84 to 14.50.

Nvidia sparked a 5% rally in the Philadelphia Semiconductor Index (SOX) and a 3% gain in the Nasdaq-100® (NDX), both of which ended at all-time highs. Consumer discretionary shares were also among the strongest sectors Thursday. The small-cap Russell 2000® Index (RUT) rose 1% and halted a three-day slide.

According to Joe Mazzola, director of trading and education at Schwab, Nvidia had a "profound effect" at both the sector and index level, partly reflecting its market value, which is nearing $2 trillion. Nvidia is now the third largest company behind Microsoft (MSFT) and Apple (AAPL).

"Nvidia's influence can be seen on markets today, as investors cheered its blowout results and showed some relief that the company's growth didn't show signs of slowing," Mazzola said.

Read all our market commentary on our Insights & Education page, and you can follow us at @SchwabResearch.

Read all our market commentary on our Insights & Education page, and you can follow us at @SchwabResearch.

Stocks on the move

The following companies had stock price moves driven by analyst ratings, quarterly results, or other news:

  • DoorDash (DASH) surged 6% after Morgan Stanley (MS) upgraded the food delivery stock to "overweight" from "equal weight," saying the company's core restaurant and grocery growth runway "remains long."
  • Etsy (ETSY) fell 8.4% after the e-commerce platform released mixed quarterly results. 
  • Keurig Dr Pepper (KDP) dropped 4% after reporting weaker-than-expected fourth-quarter sales.
  • Moderna (MRNA) rallied almost 14% after the vaccine maker topped fourth-quarter revenue forecasts.
  • Novavax (NVAX) jumped 23% after the company said it'll settle a dispute with a nongovernmental global vaccine organization that involved a canceled COVID-19 vaccine purchase agreement.
  • Rivian (RIVN) plunged 26% after the electric vehicle manufacturer released a 2024 production forecast that fell short of expectations and said it'll lay off 10% of its workforce.

Friday's earnings calendar includes Warren Buffett's Berkshire Hathaway (BRK.A) as well as Icahn Enterprises (IEP) and Warner Bros. Discovery (WBD).

Jobless claims drop

Economic numbers Thursday suggested the job market remains firm despite a recent round of corporate layoffs. The Labor Department reported Weekly Initial Jobless Claims at 201,000, down from 213,000 the previous week and about 15,000 below expectations. Continuing claims, an indication of how long it's taking the unemployed to find new jobs, fell to 1.862 million. 

Also Thursday, S&P Global’s U.S. manufacturing PMI rose to 51.5 in February, up from 50.7 in January and at a 17-month high. By contrast, S&P Global's services PMI fell to 51.3 from 52.5, weaker than expected. A number above 50 typically reflects expansion.

Next week brings a few economic reports likely to influence the market's expectations for inflation and Federal Reserve interest rate policy. Those numbers include Personal Consumption Expenditure (PCE) prices, the Fed's preferred inflation gauge, and an updated government estimate for fourth-quarter gross domestic product (GDP).

Investors continued to hold relatively low expectations for any impending Fed rate cuts after last week's stronger-than-expected January inflation updates.

Late Thursday, traders priced nearly 96% odds the fed funds target will remain unchanged at 5.25% to 5.5% following the March 19 – 20 Federal Open Market Committee (FOMC) meeting, according to the CME FedWatch Tool. The tool shows a 75% chance the fed funds rate will be unchanged after the FOMC's May meeting, up from 62% a week ago.

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