Nvidia Rebound Keeps Wall Street Near Record Highs

Wall Street

The rebound of Nvidia (NASDAQ: NVDA) is playing a significant role in maintaining the U.S. indexes near their record levels. While the S&P 500 showed a modest increase of 0.1% in early Tuesday trading, the Nasdaq composite surged by 0.5%. However, the Dow Jones Industrial Average, which excludes Nvidia, experienced a decline of 0.2%, dropping by 82 points. Nvidia’s stock rose by 2.6%, marking a turnaround from a recent three-day decline during which it lost nearly 13%. The remarkable demand for Nvidia’s AI chips has been a major driver behind the recent record highs in the U.S. stock market, despite the broader economy slowing down due to high interest rates.

Wall Street markets exhibited a mixed performance early on Tuesday following Nvidia’s third consecutive day of decline on Monday. The futures for the Dow Jones Industrial Average edged down by 0.1%, while those for the S&P 500 rose slightly less than 0.2%.

Nvidia managed to rise by 2.2% before the market opening, recovering some of its recent losses amid a cooling enthusiasm for AI technology. The stock had been on a decline after briefly surpassing Microsoft as the most valuable company on Wall Street last week, dropping by nearly 13% in just three days.

In contrast, Microsoft shares remained relatively flat after facing accusations from the European Union of antitrust violations related to the bundling of its Teams app with other business software.

Before the opening bell, SolarEdge experienced a significant tumble of more than 17% following news that its customer, PM&M Electric, is filing for bankruptcy. SolarEdge also announced plans to raise $300 million through convertible senior notes.

Toolmaker Epac slid by over 9% after missing its third-quarter sales targets and issuing lower-than-expected revenue guidance for the fourth quarter.

Later on Tuesday, the Conference Board was set to release its latest consumer confidence report. In May, U.S. consumer confidence saw an increase after three consecutive months of decline, despite concerns over high inflation and interest rates.

In Europe, major indices showed mixed results at midday, with France’s CAC 40 losing 0.8%, Germany’s DAX falling by 1%, and Britain’s FTSE 100 down by 0.2%.

Meanwhile, in Asia, Japan’s Nikkei 225 surged by 1% to reach 39,173.15, although the yen remained weak against the dollar. Hong Kong’s Hang Seng closed 0.3% higher, while China’s Shanghai Composite index dipped by 0.4%.

Other Asian markets showed gains, with Australia’s S&P/ASX 200 climbing by 1.4%, South Korea’s Kospi rising by 0.4%, Taiwan’s Taiex increasing by 0.3%, and Thailand’s SET advancing by 0.1%.

In the bond market, Treasury yields remained steady, with the 10-year Treasury yield holding at 4.23% and the 2-year note yield at 4.73%.

Benchmark crude oil prices experienced a decline, with U.S. crude falling by 55 cents to $81.08 per barrel, and Brent crude losing 52 cents to $84.63 per barrel. The euro also slid to $1.0712.

On the previous trading day, the S&P 500 slipped by 0.3% to close at 5,447.87, while the Nasdaq composite dropped by 1.1% to 17,496.82. In contrast, the Dow Jones Industrial Average rose by 0.7% to reach 39,411.21.

The markets are closely watching these developments to gauge the ongoing impacts of Nvidia’s performance and the broader economic conditions on the U.S. and global markets.

Investors are also closely monitoring geopolitical developments, particularly in Ukraine, where tensions remain high between Russia and NATO. Any escalation in the conflict could have significant repercussions on global markets, particularly on energy prices. Additionally, the ongoing COVID-19 pandemic continues to pose challenges, with new variants emerging and impacting economic activity in various regions. Supply chain disruptions and inflationary pressures remain key concerns for policymakers and investors alike, shaping market sentiment and influencing investment decisions. As the markets navigate these uncertainties, investors are advised to maintain a diversified portfolio and stay informed about the latest developments to make informed investment decisions.

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About the author: Stephanie Bedard-Chateauneuf has over six years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, health stocks, and personal finance. This stock lover likes to invest for the long-term. Stephanie has an MBA in finance.