S&P 500 Sparked to New Heights by NVDA's Blowout Earnings

The S&P 500 (Index: SPX) rose over 1.6% during the trading week ending on Friday, 23 February 2024. The index closed out the week at 5,088.80, a new record high.

It was a trading week when there was really only one big stock market story. Shares of Artificial Intelligence (AI) capable computer chip maker Nvidia (Nasdaq: NVDA) surged on Thursday, 22 February 2024, rising 16.4% above it’s previous day’s close to reach $785.38 per share as the company reported blowout earnings and boosted its business outlook.

On Friday, 23 February 2024, the company was knocking on the door of a $2 trillion market capitalization, surging past online retailing giant Amazon (NASDAQ: AMZN) and joining Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL) in that accomplishment. Together, the S&P 500′s big three components of MSFT, AAPL, and NVDA represent over one-sixth of the total value of the index.

Since NVDA is a component of the S&P 500, its surging share price prompted the entire index to rise by 2.1% on Thursday, 22 February 2024. As our longtime readers know, any daily change of 2% or more qualifies as an “interesting” day for the stock market.

The following update to the alternative futures chart shows how this action affected the trajectory of the S&P 500 during the week that was.

Even with Nvidia’s blowout earnings report, investors remain focused on the second quarter of 2024 in setting the trajectory of the S&P 500. We find it running near the upper end of the redzone forecast range we’ve added to account for the past volatility of stock prices the dividend futures-based model uses as base reference points for projecting the index’ potential future trajectories. The new redzone forecast range will run through the end of March 2024.

There was more stuff that happened to shape the future expectations of investors during the past week, which reinforces this observation. Here are the Presidents Day holiday-shortened trading week’s market moving headlines.

Tuesday, 20 February 2024

• Signs and portents for the U.S. economy:

• Oil prices hold near 3-week highs on Middle East tensions, China demand
• NYCB stock rout prompts US bank regulators to conduct health checks

Fed minions expected to start rate cuts in June 2024:

• Fed to cut US rates in June, risks skewed towards later move: Reuters poll
• US hard landing bets rise in rate options market after Fed hikes

Bigger stimulus developing in China:

• China slashes mortgage reference rates to revive property market

• China Supercharges Stimulus With Biggest Cut In Mortgage Reference Rate On Record

China central bank leaves key policy rate unchanged under shadow of Federal Reserve

Bigger trouble developing in Eurozone:

• Germany likely in recession, Bundesbank says

Nasdaq, S&P, Dow close in the red as tech stocks slide in run-up to Nvidia results

Wednesday, 21 February 2024

• Signs and portents for the U.S. economy:

• Oil dips as investors weigh up US rate cut outlook
• Tumbling US natural gas prices prove unstoppable, hurting producers

Fed minions dare not start cutting rates too soon, didn’t like January 2024′s inflation data, thinking about what’s next for managing its balance sheet:

• Fed worried about cutting rates too soon, minutes of January meeting show
• US inflation data for January made Fed’s job ‘harder,’ Barkin says
• Fed officials will dive into balance sheet debate at March FOMC

Bigger stimulus developing in China:

• China’s efforts to prop up its ailing stock market

• China Bans Stock Selling At Market Open, Close; Limits Shorting

Nasdaq ends well off session low, S&P and Dow stage reversal ahead of Nvidia’s results

• Nvidia stock surges as revenue forecast tops estimates, AI demand continues

• Nvincible Nvidia Surges After Smashing Estimates, Guiding Sharply Higher

Thursday, 22 February 2024

• Signs and portents for the U.S. economy:

• Oil settles higher as pressure mounts in the Middle East
• US farmers face harsh economics with record corn supplies in silos
• US existing home sales rise to five-month high in January

Fed minions send mixed messages on 2024 rate cuts:

• Fed’s Waller sees ‘no rush’ to cut interest rates
• Fed’s Harker: Timing of first central bank rate cut may be close
• Fed’s Jefferson sees progress on inflation, says rate cuts linked to broad set of data
• Fed’s Cook: need more confidence on inflation before cutting rates

Bigger stimulus developing in China:

• Pressure grows on China for big policy moves to fix economy

BOJ minions watch Japan stock market hit first new high in decades:

• Nikkei scores first record high since 1989 in global bull run

• Morning Bid: Nvidia helps Nikkei over finish line

ECB minions losing money:

• ECB reports record loss for 2023 as rate hikes bite

Dow jumps, Nasdaq and S&P each post best day in over a year on Nvidia euphoria

• S&P 500, Dow surge to record closing highs as Nvidia sparks AI frenzy
• Nvidia’s growing sway over the US stock market

• A game changer:’ Nvidia shocks Wall Street as generative AI hits ‘tipping point’ (update)
• Nvidia adds record $277 billion in stock market value

Friday, 23 February 2024

• Signs and portents for the U.S. economy:

• Oil falls after US Fed governor says no rush to cut interest rates

Fed cautious on a rate cut case that has yet to be made

• Major brokerages don’t expect Fed rate cut till June

Bigger stimulus developing in China:

• China expected to take gradual approach to prop up economy further, say analysts

Bigger trouble still developing in China:

• China’s new home prices extend declines despite policy support
• China’s woes won’t slow US economy, but excess capacity a concern, says Treasury’s Adeyemo

Central bank minions losing money hand over fist:

• German, Dutch central banks post big losses, warn of more

ECB minions say they’ll resist cutting interest rates too soon:

• Resist early rate cut temptation, ECB’s Nagel warns

Nasdaq, S&P, Dow gain more than 1% each for the week, boosted by Nvidia euphoria

• Nvidia briefly hits $2 trillion valuation as AI frenzy grips Wall Street

The CME Group’s FedWatch Tool projects the Fed will hold the Federal Funds Rate steady in a target range of 5.25-5.50% until 12 June 2024 (2024-Q2), unchanged from last week.

Meanwhile, the Atlanta Fed’s GDPNow tool‘s latest estimate of real GDP growth for the first quarter of 2024 (2024-Q1) remains at +2.9%, as its next update will be on 27 February 2024.

Image credit: Microsoft Bing Image Creator. Prompt: “An artificial intelligence computer chip with the letters NVDA in the middle.”