The S&P 500 Futures Eased From Their Record Highs Inspired by Nvidia

On Friday, U.S. stocks opened on a positive note, with Nvidia Corp. leading the charge and propelling the Nasdaq Composite to achieve a record high not seen in over two years.

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The Dow Jones Industrial Average (DJIA) saw an increase of 88 points, or 0.2%, reaching 39,155. The S&P 500 (SPX) rose by 21 points, or 0.4%, to 5,107. The Nasdaq Composite (COMP) advanced 81 points, or 0.5%, reaching 39,178. The previous day, the Dow Jones Industrial Average rose by 457 points, or 1.18%, reaching 39,069. The S&P 500 increased by 105 points, or 2.11%, reaching 5,087, and the Nasdaq Composite gained 461 points, or 2.96%, reaching 16,042.

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Remarkably, the S&P 500 marked its 12th record finish of the year, and the Nasdaq Composite was only 0.1% away from achieving a new record. Even small-cap stocks, represented by the Russell 2000 (RUT), experienced an increase of 1%.

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The driving force behind this market momentum was Nvidia, as its shares continued to climb, rising by an additional 4% on Friday after a historic 16% surge the previous day. The chip maker reported quarterly revenue and sales outlook that exceeded Wall Street analysts' expectations. This robust performance not only lifted semiconductor stocks but also impacted companies associated with the global artificial intelligence craze.

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Nvidia's remarkable surge, boasting a gain of over 66% since the beginning of the year according to FactSet data, played a pivotal role in pushing the S&P 500 and Nasdaq-100 to successive records in 2024. Consequently, the Nasdaq Composite, the final major U.S. equity index yet to surpass its record highs from two years earlier, appeared poised to achieve a new record close, according to Dow Jones Market Data.

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As Nvidia's market capitalization experienced the largest increase in corporate America's history, it now stands as the third most valuable stock in the S&P 500, surpassing both Alphabet and Amazon.com.

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Investors responded positively to Nvidia CEO Jensen Huang's assertion that artificial intelligence had reached a "tipping point." Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, expressed optimism about generative AI being the growth theme of the decade and highlighted Nvidia's earnings report as evidence of the current strength in AI infrastructure spending.

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Federal Reserve governor Lisa Cook, in a speech delivered after the market closed on Thursday, emphasized that the impact of AI on productivity would take time. She acknowledged the rapid adoption of generative AI but emphasized that realizing its full benefits requires complementary investments, changes in corporate structures, management practices, and worker training.

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Regarding monetary policy, Cook considered it restrictive and expressed the need for greater confidence in inflation approaching the Fed's 2% target before considering interest rate cuts. Fed governor Christopher Waller echoed a similar sentiment in a Thursday speech delivered after the market closed, indicating an expectation to begin easing monetary policy sometime in the year, depending on incoming data.

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Earnings reports were mixed, with Warner Bros. Discovery shares tumbling premarket after posting a wider-than-expected fourth-quarter loss. In contrast, Block's stock surged on Friday following stronger-than-expected margins and bottom-line growth reported late Thursday.

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