Dow Leads the Advance, Nasdaq Rises
US Stocks Open higher on Thursday – The Dow Jones Industrial Average led the way as the market overcame concerns about Nvidia’s earnings. Positive economic data also provided relief. The Dow jumped 0.7%, moving closer to a new record high.
The tech-heavy Nasdaq Composite rose 0.5%, while the S&P 500 increased by 0.3%. This recovery helped erase losses from Wednesday’s session.
Nvidia’s Mixed Earnings and Positive GDP Data
The market’s positive sentiment persisted despite a lukewarm reaction to Nvidia’s earnings report. The AI chipmaker beat estimates for both revenue and profit. However, its forecasts did not meet expectations. This discrepancy raised questions about whether the AI boom had peaked. Initially, Nvidia’s stock fell by 6%. Fortunately, shares partially recovered by the time the market opened.
On the economic front, the latest GDP data showed that the US economy grew at an annualized rate of 3% in the second quarter. This figure is higher than the previous estimate of 2.8%. This growth suggests that the US economy is still expanding despite ongoing inflation and interest rate concerns.
US Stocks Open higher on Thursday – Sector Rotation and Earnings Highlights
Amidst the market’s recovery, a potential rotation out of tech stocks became evident. The Dow and the Russell 2000, which have a larger focus on non-tech sectors, outperformed the Nasdaq on Thursday.
Earnings reports also influenced trading. Shares of Salesforce surged after the software maker announced strong earnings. In contrast, Dollar General’s stock plummeted by 25% after the retailer cut its full-year outlook due to weaker sales.
Economic Data and Federal Reserve Focus
The market remains focused on economic data for clues about the Federal Reserve’s interest rate policy. Chair Jerome Powell has indicated that a rate cut is expected in September. Investors are eager for signals on how aggressively the central bank will lower rates. Weekly US jobless claims fell to 231,000, indicating a tight labor market. This data, along with the GDP report, will likely be important for the Fed as it prepares for its next policy meeting.
US Stocks Open higher on Thursday – Concluding Remarks
Overall, the stock market showed resilience as it rebounded from previous losses. Positive earnings from companies like Salesforce and strong GDP growth helped boost investor sentiment. As the market continues to navigate concerns about tech stocks and the economy, all eyes will remain on upcoming economic data and Federal Reserve actions.
Chart by Trading View
