Marketmind: AI 'tipping point' sends Nvidia, Nasdaq, Nikkei north
Send a link to a friend
[February 22, 2024] A
look at the day ahead in U.S. and global markets from Mike Dolan
Chip giant Nvidia's uncanny ability to beat even a sky-high bar of
earnings expectations and its claim of a "tipping point" in generative
artificial intelligence has catapulted stocks in Japan, Europe to record
highs and Wall St looks set to follow.
Shares in the AI darling soared 12% premarket after it forecast a
threefold surge in quarterly revenue that handily beat estimates and
sent chip stocks surging around the planet.
Nvidia said it expects an eye-popping first-quarter revenue growth of
233%, way ahead of even Wall Street's lofty expectations of 208% growth,
and after it raked in some $22 billion of revenue in the quarter just
passed. After more than trebling over the past year, the latest stock
surge is set to load back another $130 billion in market value onto the
$1.7 trillion behemoth and likely reclaim its ranking as America's third
most valuable company later on Thursday.
"Accelerated computing and generative AI have hit the tipping point,"
Nvidia chief executive Jensen Huang was reported as saying after results
were released after the bell on Wednesday and he added the firm can
barely keep up with demand.
Unsurprisingly, the boom has lifted Nasdaq futures 2% before today's
open and after a dour session on Wednesday S&P500 are up over 1% too.
But records went off like a Christmas tree around the world through the
night as the AI chip frenzy was enough to send Japan's Nikkei leaping to
new all-time highs at last - finally surpassing previous peaks set at
the height of Japan's property bubble in 1990.
![](http://archives.lincolndailynews.com/2015/May/02/images/ads/current/guzzardo_lda022609.png)
Even Europe's STOXX 600 soared almost 1% to hit a new record - beating
previous highs set in January 2022 - with its regional chipmakers
leading the charge too. Germany's DAX, France's and Amsterdam's all
scaled new peaks.
And China's tentative stock market recovery continued for a fourth
consecutive session post-holidays despite ongoing angst about the state
of the economy there.
The AI buzz around the world and rocketing stock values stand in
contrast to the darker mood in interest rate markets - where the Federal
Reserve and other central banks appear to be stalling on interest rate
cuts in the first half of this year.
The bulk of Fed policymakers were concerned about the risks of cutting
interest rates too soon, with broad uncertainty about how long borrowing
costs should remain at their current level, according to the minutes of
the Fed's Jan. 30-31 meeting released late on Wednesday.
Even though the Fed minutes did indicate that discussions about a
slowing of its balance sheet rundown would start as soon as next month,
bond markets were under the cosh.
[to top of second column] |
![](../images/022224PIX/busine58.jpg)
Traders work on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., February 12, 2024. REUTERS/Brendan McDermid
![](http://archives.lincolndailynews.com/2024/Feb/22/images/ads/current/fcs_funeral_lda_border_04029022.png)
Hit also by poor demand at Wednesday's 20-year bond auction and
year-on-year crude oil price gains at their highest since October,
Treasury yields nudged higher on Thursday.
Full-year Fed rate cut expectations have now been scaled back to
less than 90 basis points, with futures markets not fully pricing
the first quarter-point cut until July.
Despite that, the dollar index fell back to the lowest level in
almost three weeks - with the euro leading the way higher after
surprisingly upbeat early February business activity readings for
the euro zone.
The downturn in euro zone business activity eased this month as the
dominant services sector broke a six-month streak of contraction,
offsetting a deterioration in manufacturing, HCOB's composite S&P
Global PMI survey showed.
The index rose to 48.9 this month from January's 47.9, ahead of
expectations in a Reuters poll for 48.5. Even though that marked its
ninth month below the 50 level separating growth from contraction,
the services PMI jumped to 50.0, far exceeding forecasts.
U.S. equivalent survey readings and weekly jobless claims numbers
are due out later alongside a packed diary of senior Fed speakers
and another heavy corporate earnings schedule.
Key diary items that may provide direction to U.S. markets later on
Thursday:
* U.S. flash Feb business surveys from S&P Global, weekly jobless
claims, Jan existing home sales. Canada Dec retail sales
* Federal Reserve Vice Chair Philip Jefferson, Fed Board Governor
Lisa Cook, Fed Board Governor Christopher Waller, Philadelphia Fed
President Patrick Harker, Minneapolis Fed chief Neel Kashkari all
speak
* U.S. corp earnings: Intuit, Booking, Coterra Energy, PG&E, Moderna,
Edison, Insulet, Ameren, EOG, Live Nation Entertainment, VICI
Properties, Copart, Pioneer Natural Resources, Newmont, Dominion
Energy, LKQ, Quanta Services, Builders FirstSource, Iron Mountain,
Teleflex, Pool, Keurig Dr Pepper, Entergy
* Informal European Union finance ministers meeting in Brussels
* U.S. Treasury auctions 30-year inflation-protected bonds, 4-week
bills
(By Mike Dolan, mike.dolan@thomsonreuters.com; editing by David
Evans)
[© 2024 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
![](http://archives.lincolndailynews.com/2024/Feb/22/images/ads/current/ldn_smallsda_BUSINESSMAG_2023.png) |