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S&P 500, Dow rally to new records after Nvidia’s record-breaking results
Both the S&P 500 and Dow Jones Industrial Average reached new all-time highs on Thursday, buoyed by record-breaking results from chipmaker Nvidia that set off a rally in other technology companies.
The S&P 500 rose 2.1% Thursday to a fresh record, while the tech-heavy Nasdaq added 3%. The Dow, which has a smaller weighting in tech stocks, rose 1.1%, marking its first close above 39,000.
Nvidia, a central player in the boom surrounding artificial intelligence technology, reported scorching demand for its semiconductors when it released its quarterly earnings on Wednesday. Nvidia’s stock price jumped more than 16% on Thursday, adding $273 billion to its market valuation in a single day, beating the previous record one-day jump when Meta gained $205 billion on Feb. 2 of this year.
“Today’s record-breaking stock market is due to both the future promise of AI and the record-breaking results that the poster child for AI – Nvidia – reported in the here and now,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, in an email.
He added, “As we’ve been saying for the past 12 months, as long as the economy keeps expanding, it’s really hard to interrupt a bull market.”
The S&P 500 has gained more than 7% since year start, while the Nasdaq has jumped 8.6%. The Dow, meanwhile, has gained 3.6% over the same period.
Tech stock rally
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, with Nvidia’s quarterly report on Wednesday giving a lift to other tech stocks.
Synopsis, which makes software used to test and develop chips, rose 7.1% after raising its profit forecast. Other chipmakers and companies involved in the chipmaking industry gained ground. Advanced Micro Devices rose 11.4% and Lam Research rose 4.8%.
“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% 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% growth. Information technology companies, which include Nvidia, are expected to notch 22% 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.
Mixed economic data
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%. Analysts expect that report to show inflation cooled to 2.3% in January. It peaked at 7.1% in June of 2022.
Nearly 90% 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.
On the losing end in Thursday trading, electric truck and SUV maker Rivian tumbled 26.1% after it reported another loss and issued a weaker-than-expected production outlook. Lucid, another electric vehicle manufacturer, slid 16.1% after it missed Wall Street sales forecast and also gave a weaker production estimate than analysts had called for.
Online craft marketplace Etsy fell 8.5% after it missed Wall Street’s profit forecast by a wide margin.
The International Brotherhood of Teamsters says workers at seven Amazon facilities will begin a strike Thursday morning in an effort by the union to pressure the e-commerce giant for a labor agreement during a key shopping period.
The Teamsters say the workers, who authorized walkouts in the past few days, are joining the picket line after Amazon ignored a Dec. 15 deadline the union set for contract negotiations. Amazon says it doesn’t expect any impact on its operations during what the union calls the largest strike against the company in U.S. history.
The Teamsters say they represent nearly 10,000 workers at 10 Amazon facilities, a small portion of the 1.5 million people Amazon employs in its warehouses and corporate offices.
Amazon is ranked No. 2 on the Fortune 500 list of the nation’s largest companies.
At a warehouse in the New York City borough of Staten Island, thousands of workers who voted for the Amazon Labor Union in 2022 and have since affiliated with the Teamsters. At the other facilities, employees – including many delivery drivers – have unionized with them by demonstrating majority support but without holding government-administered elections.
The strikes happening Thursday are taking place at an Amazon warehouse in San Francisco and six delivery stations in southern California, New York City, Atlanta and the Chicago suburb of Skokie, Illinois, according to the union’s announcement. Amazon workers at the other facilities are “prepared to join” them, the union said.
“Amazon is pushing its workers closer to the picket line by failing to show them the respect they have earned,” Teamsters General President Sean M. O’Brien said in a statement.
“If your package is delayed during the holidays, you can blame Amazon’s insatiable greed. We gave Amazon a clear deadline to come to the table and do right by our members. They ignored it,” he said.
The Seattle-based online retailer has been seeking to re-do the election that led to the union victory at the warehouse on Staten Island, which the Teamsters now represent. In the process, the company has filed a lawsuit challenging the constitutionality of the National Labor Relations Board.
Meanwhile, Amazon says the delivery drivers, which the Teamsters have organized for more than a year, aren’t its employees. Under its business model, the drivers work for third-party businesses, called Delivery Service Partners, who drop off millions of packages to customers everyday.
“For more than a year now, the Teamsters have continued to intentionally mislead the public – claiming that they represent ‘thousands of Amazon employees and drivers’. They don’t, and this is another attempt to push a false narrative,” Amazon spokesperson Kelly Nantel said in a statement. “The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union.“
The Teamsters have argued Amazon essentially controls everything the drivers do and should be classified as an employer.
Some U.S. labor regulators have sided with the union in filings made before the NLRB. In September, Amazon boosted pay for the drivers amid the growing pressure.
NEW YORK — The Teamsters union is launching a strike against Amazon at numerous locations across the country, including in Maspeth, Queens.
The Teamsters are calling it the largest strike against Amazon in United States history, and it’s set to begin at 6 a.m. Thursday. In addition to New York City, workers will be joining picket lines in Atlanta, Southern California, San Francisco and Illinois.
In a video announcement released Wednesday night, workers voiced their frustrations.
“Us being strike ready means we’re fed up, and Amazon is clearly ignoring us and we want to be heard,” one worker says in the video.
“It’s really exciting. We’re taking steps for ourselves to win better conditions, better benefits, better wages,” another worker in the video says.
The union says it represents about 10,000 Amazon employees and that Amazon ignored a deadline to come to the table and negotiate. The $2 trillion company doesn’t pay employees enough to make ends meet, the union asserts.
At the height of the holiday season, many are wondering what this means for packages currently in transit.
Teamsters President Sean O’Brien said, “If your package is delayed during the holidays, you can blame Amazon’s insatiable greed.”
Amazon says Teamsters are misleading the public
An Amazon spokesperson says the Teamsters are misleading the public and do not represent any Amazon employees, despite any claims.
“The truth is that the Teamsters have actively threatened, intimidated, and attempted to coerce Amazon employees and third-party drivers to join them, which is illegal and is the subject of multiple pending unfair labor practice charges against the union,” the spokesperson said in a statement.
An Amazon representative says the company doesn’t expect operations to be impacted.
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