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S&P 500, Dow close slightly up; Nvidia gains after the bell

Published 02/21/2024, 05:55 AM
Updated 02/21/2024, 07:21 PM
© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 9, 2024.  REUTERS/Brendan McDermid//File Photo

By Chuck Mikolajczak

NEW YORK (Reuters) - The S&P 500 and Dow Jones industrials eked out small gains on Wednesday, while the Nasdaq closed lower for a third straight session as investors awaited the release of Nvidia (NASDAQ:NVDA)'s earnings that could determine near-term momentum for equities.

After the closing bell, Nvidia shares surged 6% after it forecast fiscal first-quarter revenue above estimates on robust demand for its chips that dominate the market for artificial intelligence (AI).

During the session, Nvidia shares fell 2.85%, adding to the previous day's decline of more than 4% for the chip designer.

Nvidia shares have soared nearly 40% this year, making it the biggest gainer on the S&P 500 after a leap of almost 240% in 2023. Analysts had cautioned that its lofty valuation could make the stock vulnerable to a sharp pullback if the company delivered anything short of a blowout report.

"It's been driven by excitement and enthusiasm around AI and of course the AI darling in the room is Nvidia," said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City, Utah.

"Markets are looking at Nvidia with a little bit of anxiety, maybe ... we need to see a good report from the leader in the space and that leader is Nvidia."

The S&P 500 climbed 0.13% to end the session at 4,981.80 points. The Nasdaq declined 0.32% to 15,580.87 points, while the Dow Jones Industrial Average rose 0.13% to 38,612.24 points.

Minutes from the Federal Reserve's January meeting showed most policymakers were concerned about risks of cutting interest rates too soon, with broad uncertainty about how long borrowing costs should remain at their current level.

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After the release of the minutes, traders of U.S. short-term interest-rate futures stuck to bets the Fed will begin cutting interest rates no earlier than June.

Despite the modest advance, nearly all of the 11 major S&P sectors advanced, with only the heavily weighted technology index lower with a decline of 0.76%. Energy shares led gainers with a rise of 1.86%.

Wall Street's 2024 rally ran into turbulence last week after data hinted at sticky inflation, raising concerns the Fed would be in no hurry to cut interest rates.

The January inflation data complicates upcoming rate decisions, Richmond Fed president Thomas Barkin said.

Palo Alto Networks (NASDAQ:PANW) plunged 28.44% after the cybersecurity firm forecast third-quarter billings below analyst estimates.

Shares of other cybersecurity companies such as Fortinet (NASDAQ:FTNT), Zscaler (NASDAQ:ZS) and Crowdstrike Holdings were also weaker.

Amazon.com (NASDAQ:AMZN) edged up, with the company set to join the Dow Jones Industrial Average effective next week, replacing Walgreens Boots Alliance (O:WBA), which saw its shares decline.

Advancing issues were roughly even with decliners by on the NYSE. Declining issues outnumbered advancers for a 1.73-to-1 ratio on the Nasdaq.

The S&P 500 posted 25 new highs and no new lows; the Nasdaq recorded 47 new highs and 96 new lows.

Volume on U.S. exchanges was relatively light, with 10.5 billion shares traded, compared to an average of 11.7 billion shares over the previous 20 sessions.

Latest comments

NVidia's P/E is rather modest considering the pace of their growth contrasted next to other big cap tech companies.
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