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Markets in Asia and Europe gained ground.
Bond yields were relatively steady. The yield on the 10-year Treasury rose to 4.33 per cent from 4.32 per cent late Wednesday.
Shares in Nvidia rocketed on Thursday. Credit: Bloomberg
On the losing end, electric truck and SUV maker Rivian tumbled 25.6 per cent after it reported another loss and issued a weaker-than-expected production outlook. Lucid, another electric vehicle manufacturer, slid 16.8 per cent after it missed Wall Street sales forecast and also gave a weaker production estimate than analysts had called for.
Online craft marketplace Etsy slipped 7.2 per cent after it missed Wall Street’s profit forecast by a wide margin.
Technology stocks have been the driving force behind the market’s rally that started in October. Solid earnings from some of the biggest names in the sector are helping justify and reinforce those big gains.
“Investors are still wondering, will the market top out or broaden out,” said Sam Stovall, chief investment strategist at CFRA. “As of now, investors are basically saying I’m going to let this market take me where it wants to go, and right now that’s higher.”
Wall Street expects just under 4 per cent growth for earnings in the overall S&P 500 during the fourth quarter. The communication services sector, which includes Google’s parent Alphabet, is expected to report 45 per cent growth. Information technology companies, which include Nvidia, are expected to notch 22 per cent growth.
“The near-term momentum in AI-related stocks is likely to continue,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management.
Nearly 90 per cent of companies in the S&P 500 have reported earnings. There are still a few big names on deck this week. Online travel giant Booking Holdings and TurboTax maker Intuit will report later Thursday.
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Wall Street’s focus on earnings this week follows economic data from the previous week that prompted a stumble in the market. Inflation data came in hotter than Wall Street expected, while retail sales fell more than anticipated. That raised concerns about the timing of hoped-for interest rate cuts from the Federal Reserve.
Wall Street is now betting that the central bank will start trimming its benchmark rate in June, rather than March.
Investors could get more clarity on inflation next week when the government releases its monthly report on personal consumption and expenditures. It’s the Fed’s preferred measure of inflation as it tries to tame inflation back to 2 per cent. Analysts expect that report to show inflation cooled to 2.3 per cent in January. It peaked at 7.1 per cent in June of 2022.
AP, Bloomberg
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