Market Performance Overview
Today's stock market saw significant gains across major indexes. The Nasdaq Composite rose by 1.5%, adding over 200 points, while the Dow Jones Industrial Average increased by 0.6%. The S&P 500 achieved a new record high with a 1.1% rise. Contributing to these gains were strong performances in the mega cap and semiconductor sectors.
Sector Highlights
- The PHLX Semiconductor Index (SOX) saw an increase of 2.1%.
- The Vanguard Mega Cap Growth ETF (MGK) went up by 1.8%.
- Notable stock performances included NVIDIA (NVDA, Financial), which surged 7.2%, Microsoft (MSFT, Financial) with a 2.7% gain, and Meta Platforms (META) rising by 3.3%.
Economic Indicators and Market Reaction
The February Consumer Price Index (CPI) report showed a month-over-month core-CPI increase of 0.4% and a year-over-year rise of 3.8%, slightly above expectations. However, the market was not overly concerned, anticipating a decrease in shelter costs in the near future. The likelihood of a rate cut at the June FOMC meeting remains high at 69.8%, as per the CME FedWatch Tool.
Treasury and Sector Performance
Following the CPI report, Treasury yields rose, with the 2-year note yield increasing by seven basis points to 4.60% and the 10-year note yield by five basis points to 4.16%. The S&P 500 utilities and real estate sectors underperformed due to the rate hike, while the information technology sector led gains with a 2.5% increase, boosted by Oracle (ORCL, Financial) which jumped 11.8%, making it the top performer in the S&P 500.
Year-to-Date Market Performance
- S&P 500: +8.5%
- Nasdaq Composite: +8.4%
- S&P Midcap 400: +3.2%
- Dow Jones Industrial Average: +3.5%
- Russell 2000: +1.9%
Economic Data Review
Key economic data from today includes:
- February NFIB Small Business Optimism at 89.4, slightly down from 89.9.
- February CPI and Core CPI both reported a 0.4% increase, with Core CPI slightly exceeding expectations.
- The February Treasury Budget revealed a deficit of $296.3 billion, with outlays surpassing receipts significantly.
The reports highlighted the impact of shelter costs on CPI and the significant outlay for net interest due to higher interest rates.
Looking Ahead
Upcoming economic data includes:
- Weekly MBA Mortgage Index
- Weekly crude oil inventories
International market performance and commodity prices were also noted, with mixed results across different regions and slight changes in commodity prices.
Today's News
Wall Street concluded Tuesday on a high note, with significant indices recording gains following the latest consumer inflation data, which did not significantly alter market expectations regarding interest rate cuts. The technology sector, particularly companies related to artificial intelligence, experienced a notable boost, with Oracle (ORCL, Financial) and Nvidia (NVDA, Financial) leading the charge. The Nasdaq Composite advanced by 1.54%, closing at 16,265.64 points, while the S&P 500 added 1.12% to reach a new record closing high of 5,175.26 points. The Dow Jones Industrial Average also saw an increase, climbing 0.61% to end at 39,005.46 points.
Microsoft (MSFT, Financial) announced a quarterly dividend of $0.75 per share, maintaining its previous rate, with a forward yield of 0.72%. The dividend is payable on June 13 to shareholders of record as of May 16, with the ex-dividend date set for May 15. This announcement comes amid a backdrop of strong financials and a bright outlook for Microsoft, further solidified by its participation in the Morgan Stanley Technology, Media, and Telecom Conference.
Artificial intelligence continues to be a focal point for investors, as highlighted by Morgan Stanley's identification of high conviction stocks poised to benefit from U.S. productivity opportunities through AI. Companies are in the experimental phase of AI adoption, focusing on customer support gains and integrating GitHub into their research and development processes. This trend is expected to lead to meaningful margin expansion in the latter half of 2024 and into 2025.
Super Micro Computer (SMCI, Financial) saw its shares jump more than 7% after being highlighted as a new long idea by Hedgeye analyst Felix Wang, due to its pivotal role in the AI revolution. This surge was supported by its collaboration with Nvidia (NVDA, Financial) to build AI GPU-based servers, emphasizing the growing demand for AI servers.
On the regulatory front, partial driving automation systems from major automakers like Tesla (TSLA, Financial), Ford (F, Financial), and General Motors (GM, Financial) received lukewarm ratings in a recent study, which pointed out the lack of adequate measures to prevent misuse and maintain driver focus.
Amid these developments, several companies have made strategic moves, including Allbirds (BIRD, Financial) appointing Joe Vernachio as its new CEO, and United Airlines Holdings (UAL, Financial) requesting Boeing (BA, Financial) to halt the production of 737 Max 10 jets in favor of a smaller variant.
Lastly, the energy sector is bracing for an increase in AI data center power consumption, projected to rise from 1% to 4% of total power usage by 2035. This forecast underscores the need for more and upgraded data center facilities to accommodate the growing energy demands of advanced chips.
