Nvidia, leading the AI revolution, reported fourth-quarter revenue of $68.13 billion, beating analyst estimates. Shares rose about 3% in extended trading.The Philadelphia SE Semiconductor index rose 1.6%, outpacing Nvidia’s gains.
The S&P Software & Services index, which recovered from this year’s 23% slump, clearly outperformed, rising 2.9%.
“We’re in the middle of a tension here between negative sentiment and extreme price action in parts of the market,” said Zach Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.
“I think concerns about disruption are more acute than concerns about return on investment right now,” Hill added. “Investors are trying to grapple with what could potentially be an existential risk, and that’s a bigger problem than not getting as much of a payout as you would like.” Richmond Fed President Tom Barkin weighed in on the issue, saying it’s not clear the AI rollout will displace workers. The addition of the technology could empower workers and make the labor market more efficient. The Dow Jones Industrial Average rose 307.65 points, or 0.63%, to 49,482.15, while the S&P 500 gained 56.06 points, or 0.81%, to 49,482.15. 6,946.13 and the Nasdaq Composite gained 288.40 points, or 1.26%, to 23,152.08.
Of the eleven major sectors in the S&P 500, technology stocks led the percentage gainers, while the industrial sector suffered the biggest losses. Axon Enterprise rose 17.6% after the Taser maker beat fourth-quarter profit estimates. Both First Solar and Lowe’s Companies gave weaker-than-expected annual sales guidance, sending their shares down 13.6% and 5.6%, respectively.
After Lowe’s disappointing report, homebuilders and builders clearly underperformed, down 3% and 3.7% respectively, despite 30-year mortgage rates falling to the lowest level in 3.5 years last week, according to the Mortgage Bankers Association. On the fundamentals side, we see alcohol makers with Brown-Forman down 7.6% and Molson Coors down 4.8%, after London-listed Johnnie Walker and Guinness maker Diageo forecast an organic sales decline of 2% to 3% in 2026 and cut the interim dividend by half. GoDaddy fell 14.3% after the internet service provider forecast annual revenue would be below Wall Street expectations.
Given the recent volatility in software stocks, the results of Salesforce, Intuit and Snowflake are likely to be subject to additional scrutiny.
On the NYSE, advancing issues outnumbered declining issues by a ratio of 1.78 to 1. There were 635 new highs and 98 new lows on the NYSE.
On the Nasdaq, 3,148 stocks rose and 1,557 fell as advancing issues outnumbered declining stocks by a 2.02-to-1 ratio.
The S&P 500 posted 50 new 52-week highs and nine new lows, while the Nasdaq Composite posted 127 new highs and 94 new lows.
Volume on U.S. exchanges was 17.50 billion shares, compared to the full-session average of 20.27 billion over the past 20 trading days.
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