Nvidia Drives Broader Market Gains
U.S. equities moved higher Wednesday, supported largely by strength in Nvidia, the most heavily weighted company in major indexes. The S&P 500 advanced 0.6%, trimming earlier gains that briefly approached 1%, and sat about 1.4% below its record high reached late last month. The Dow Jones Industrial Average added roughly 0.3%, while the Nasdaq Composite climbed 0.8% to 1% during the session.
Nvidia shares rose 2.2% after Meta Platforms unveiled a long-term agreement to deploy millions of Nvidia chips and related hardware across its artificial intelligence data centers. Given Nvidia’s status as the most valuable company in the market, its performance exerted outsized influence on index movements.
“No one deploys AI at Meta’s scale,” Nvidia CEO Jensen Huang said, underscoring the growing infrastructure race among technology leaders.
AI Optimism Tempered by Cost Concerns
The rally highlighted continued investor enthusiasm around artificial intelligence development. However, market participants remain mindful of the significant capital expenditures required to build large-scale AI systems. Concerns persist about whether companies can generate sufficient returns from these investments.
Meta shares initially fell as much as 1.7% before rebounding to a modest gain. Broader market volatility in recent weeks has reflected worries that AI-driven automation could disrupt industries such as software, logistics and professional services, prompting swift selloffs in stocks perceived as vulnerable.
Earnings Strength Offers Support
A solid earnings season has provided an additional tailwind. Cadence Design Systems surged 9.2% after exceeding profit and revenue expectations. Management pointed to sustained demand for its engineering software, even amid uncertainty about technological shifts.
Analog Devices gained 1.8% after topping forecasts and reporting record data center orders. Meanwhile, Moderna rose 5% after stating the Food and Drug Administration agreed to review its flu vaccine candidate.
Offsetting some gains, Palo Alto Networks fell 6.7%. While the cybersecurity company beat profit expectations, forward guidance for the current quarter and fiscal year came in below analyst projections.
Strong Data Pushes Treasury Yields Higher
In fixed income markets, Treasury yields ticked upward following economic reports that exceeded forecasts. The 10-year Treasury yield edged up to 4.07% from 4.05% the previous session.
Industrial production rose more than anticipated, durable goods orders excluding transportation equipment increased, and housing starts surpassed expectations. These indicators suggest economic momentum remains intact.
Minutes from the Federal Reserve’s latest policy meeting showed officials prefer to see further cooling in inflation before considering additional interest rate cuts. While many investors expect rate reductions later this year, resilient data could encourage policymakers to maintain current levels for longer.
Overseas Markets Also Advance
Global markets followed a generally positive tone. London’s FTSE 100 gained 1.2% after inflation data reinforced expectations that the Bank of England could soon ease policy.
Japan’s Nikkei 225 rose 1% as Prime Minister Sanae Takaichi secured reappointment following a decisive election victory earlier this month. Several Asian exchanges remained closed for Lunar New Year holidays.
