Stocks around the world sweep into AI rally: Markets wrap

(Bloomberg) — Stocks surged ahead as bullish outlook for Nvidia Corp. ignites artificial intelligence mania and data shows the world's largest economy remains strong.

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From the United States to Europe and Japan, stocks hit all-time highs, with shares of the most valuable chipmaker rising 15%, on track to add more than $230 billion to its market value. This would be the largest increase in value in a single session ever – surpassing the $197 billion gain achieved by Meta Platforms Inc. With the numbers now in, bulls are calculating the new price-to-earnings ratio, or the amount investors are paying for future growth. In other words, Nvidia's profits have been growing faster than its stock.

“Nvidia has gotten where it is on very strong earnings and revenue,” said James Demert, chief investment officer at Main Street Research. “When a company achieves 265% year-over-year revenue growth — as Nvidia did — it deserves a premium valuation.”

The Nasdaq 100 rose 2.5%, while the S&P 500 rose the most since November. The $15 billion VanEck Semiconductor ETF (SMH) jumped 6.5%. Stocks were also boosted by strong manufacturing, housing and labor market data, as traders took a more hawkish stance on the Federal Reserve. 10-year Treasury yields were little changed at 4.32%.

“There are few things more certain than death, taxes, and Nvidia beating profits,” said Ryan Detrick of the Carson Group. “The bar has been set very high, and incredibly they have stepped up again and achieved great success.”

Demert says that for investors who already own Nvidia, the recommendation would be to hold shares and avoid selling for expected future growth “because we are still early in this transformative AI technology.”

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“For investors who do not own stocks, we will buy on any weakness,” he noted. “With Nvidia stock, there will be corrections and bumps along the way, but the stock will continue to climb the wall of anxiety.”

Nvidia's results come as a relief to AI bettors, as forecasts have improved significantly, according to Soletta Marcelli of UBS Global Wealth Management. Despite the industry's boom, she sees potential for further gains in technology stocks — especially those that may benefit from the AI ​​revolution.

“We believe the near-term momentum in AI-related stocks is likely to continue,” Marcelli noted. “To achieve this position, we maintain our preference for semiconductors and software, and see opportunities for beneficiaries of AI edge computing and big technology and their partners.”

Nvidia's blockbuster results also highlighted technology's dominance over the rest of the stock market, with the “Magnificent Seven” group of corporate giants leading the gains.

For Wolfe Research's Chris Sinek, US stocks are poised to advance over the next two or three weeks – with AI-backed names, most of the “Mag 7”, and momentum themes driving the gains.

In fact, other stock market industries are not seeing as strong a rise as the technology sector.

“We still think it will be important for the stock market to expand much more than it has this year if it is going to move much more than it has already done so far this year,” said Matt Maley of Miller Tabak+. a company . “What we are trying to say is that even though the technology sector is the most important for the stock market right now, there are still a lot of opportunities in other sectors of the market.”

The most prominent features of the company:

• AT&T Inc.'s mobile phone service across the United States is responding to widespread disruptions in which tens of thousands of customers complained of being unable to make or receive calls.

• Rivian Automotive, an electric vehicle maker, issued a disappointing production forecast and announced another round of job cuts.

• AbbVie Inc. taps the hot U.S. investment-grade bond market on Thursday to help finance its acquisition of ImmunoGen Inc. and Cerevel Therapeutics Holdings Inc., adding to a recent rush to finance acquisitions.

• Moderna announced revenues in the fourth quarter that exceeded analysts’ expectations by gaining market share for the Covid vaccine over its competitor, Pfizer.

• Newmont, the world's largest gold producer, plans to sell six mines and two projects in a set of divestments aimed at generating $2 billion in cash.

• Space exploration startup Intuitive Machines Inc. Astronauts on Thursday will attempt to place the first intact American-made lander on the moon's surface in more than 50 years.

• Brazil's JBS SA says its planned US listing is likely to be delayed to the second half of 2024 as the world's largest meat producer works to allow more investors to vote on the move.

Main events this week:

• Real estate prices in China today, Friday

• Germany Ifo Business Climate, GDP, Friday

• The European Central Bank publishes its one- and three-year inflation expectations survey on Friday

Some key movements in the markets:

Stores

• The S&P 500 was up 1.7% as of 11:44 a.m. New York time

• The Nasdaq 100 rose 2.5%.

• The Dow Jones Industrial Average rose 0.7%.

• The Stoxx Europe 600 index rose 0.8%.

• The MSCI World Index rose 1.4%.

Currencies

• The Bloomberg Dollar Spot Index was little changed

• There was little change in the euro at $1.0814

• There was little change in the pound sterling at $1.2646

• The Japanese yen fell 0.2 percent to 150.57 yen to the dollar

Digital currencies

• Bitcoin rose 0.2 percent to $51,509.42

• Ethereum rose 1.5% to $2,972.5

Bonds

• There was little change in the yield on 10-year Treasury bonds at 4.32%.

• The yield on 10-year German bonds fell by one basis point to 2.44%.

• The yield on British 10-year bonds was little changed at 4.10%.

Goods

• West Texas Intermediate crude rose 0.8% to $78.53 a barrel

• Gold in spot transactions fell 0.2 percent to $2,021.37 per ounce

This story was produced with assistance from Bloomberg Automation.

– With assistance from Subrat Patnaik, Carmen Reineke, and Ryan Vlastelica.

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