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Market Movers Weekly March 1, 24 - Nvidia's Milestone, S&P 500 Peaks, and UBS's Bullish Forecast Amid Tech Dominance

Nvidia's Market Surge

This week, Wall Street soared to new heights, fueled by Nvidia's stellar performance, which rounded off a week of groundbreaking achievements with its remarkable earnings announcement. The S&P 500 nudged to a new closing peak, just above the flatline, and the Dow Jones Industrial Average inched up by 0.2%, both setting new records. However, the Nasdaq Composite slightly retreated by 0.1%, despite a strong weekly showing. The AI sector, especially after Nvidia's valuation approached an astonishing $2 trillion due to the largest single-day market value gain in history, captured significant attention.

Growing anticipation surrounds potential US interest rate reductions, with Federal Reserve officials hinting at upcoming cuts, though the precise timing is still debated. The week was also marked by a strong earnings season, underscored by exceptional performances from certain companies, leading to notable stock surges.

Looking forward, key earnings reports and economic indicators are expected to guide the market further, focusing on the Federal Reserve's rate cut timeline and its economic implications. Moreover, expectations for the S&P 500's growth remain high, buoyed by optimism for economic expansion and sector-specific advances, despite uncertainties related to Federal Reserve policies.

Stock market: S&P 500, Dow hit fresh records as Wall Street ends Nvidia-fueled rally week

US stocks decelerated on Friday but closed a record-breaking week, led by Nvidia's earnings that fueled a rally in AI stocks. The S&P 500 slightly rose to a new high, and the Dow Jones added 0.2%, hitting a new record, while the Nasdaq Composite fell by 0.3%. Nvidia's valuation neared $2 trillion after a historic $277 billion gain, the largest in Wall Street history, sparked by demand for its AI chips.

Interest in US interest rate cuts re-emerged, with Federal Reserve officials indicating forthcoming cuts, albeit with varied opinions on timing. The earnings season showed strength, with over a third beating estimates. Notably, Block's shares jumped 16% after a positive forecast, and Carvana surged 30%, celebrating its first annual profit.

The S&P 500 narrowly secured a new record close.

The S&P 500 edged to a new record close on Friday, topping off a week dominated by AI enthusiasm and Nvidia's remarkable performance. The index marginally surpassed the break-even point to conclude the week on a triumphant note. Meanwhile, the Dow Jones Industrial Average saw a modest increase of 0.2%, adding roughly 60 points to its value. On the other hand, the Nasdaq Composite took a slight step back, dipping by 0.3%, reflecting a mixed sentiment in the market despite the overall bullish trend.

A look at the week ahead

Zoom (ZM) is confirmed to report its fourth quarter earnings on February 26, 2024, as the earnings season draws to a close. This season has largely buoyed Wall Street, with major companies like Salesforce (CRM), Lowe's (LOW), and Paramount (PARA) also set to disclose their financials. Amidst these reports, new GDP readings and consumer confidence data are anticipated, which will further guide Federal Reserve officials on the timing of rate cuts. Additionally, upcoming insights into the housing market with data on mortgage applications and new home sales are expected to shape the economic outlook for 2024.

Forecasts of an even higher S&P rally

Goldman Sachs has updated its year-end target for the S&P 500 to 5,200, up from 5,100, indicating a 4% increase from last week's level. This adjustment is anchored in optimistic projections for economic growth and profit surges in the tech and communication sectors. These sectors include key players from the "Magnificent Seven," heavily influencing the index's market cap.

The new forecast challenges earlier pessimistic market slowdown predictions, with the S&P 500 recently surpassing the 5,000 mark for the first time. Despite uncertainties about the Federal Reserve's monetary policy and rate cut timings, the outlook is positive. The expectation for stronger GDP growth, a weaker dollar's impact, and significant profit margins from mega-cap stocks, especially those in tech and consumer sectors, underscores a promising market trend for 2024

Weekly News

Nvidia's Market Surge (2)

The Tech Giant Conundrum: Their Oversized Role in World Markets

The dominance of U.S. megacap tech stocks in the MSCI World Index highlights a market tilt towards these giants, raising concerns about sector-specific risks and diversification challenges. With U.S. equities making up a significant portion of the index, the focus on tech behemoths like Apple, Microsoft, and Nvidia reflects their market appeal but also points to potential vulnerabilities. Despite the risks, the allure of AI-driven profits keeps investor interest in these companies strong, yet it prompts a cautious approach, suggesting a look at opportunities in less concentrated markets for diversification

UBS Forecasts S&P 500 Surge, Downgrades Rivian Amid Market Adjustments

UBS has set the highest S&P 500 year-end forecast among Wall Street firms at 5,400, an 8% increase from the recent close. This optimistic revision reflects a favorable economic outlook, including potential interest rate cuts by the Federal Reserve, declining inflation, and strong earnings expectations. UBS's confidence is buoyed by robust consumer spending and economic growth, alongside a bullish view on inflation's impact on stock prices. This update positions UBS's forecast above others, including Goldman Sachs's 5,200 target, amidst a strong market rally led by tech giants and AI enthusiasm.

Nvidia Achieves $2 Trillion Market Cap Amid AI Surge

Nvidia's ascent to a $2 trillion market cap highlights its significant role in the AI boom, marking a historic milestone with a remarkable surge in shares post-earnings report. The company's valuation soared by $277 billion in a single day, a record on Wall Street, reflecting its dominance in the AI sector and influencing major indices.

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