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Dow heads for fresh record, Nasdaq slides as Nvidia surrenders early gains

The Nasdaq wavered between gains and losses on Friday as Big Tech stocks like Nvidia Corp. trimmed early gains, while the S&P 500 and Dow headed for fresh record highs and their biggest weekly advances of the year.

What’s happening

  • The Dow Jones Industrial Average DJIA gained 150 points, or 0.4%, to 39,220.
  • The S&P 500 SPX was up by 10 points, or 0.2%, at 5,097 after rising as much as 0.5% earlier.
  • The Nasdaq Composite COMP was marginally higher at 16,042 after rising more than 0.5% earlier.

On Thursday, the Dow Jones Industrial Average rose 457 points, or 1.18%, to 39,069; the S&P 500 increased 105 points, or 2.11%, to 5,087, notching its 12th record close of the year so far; and the Nasdaq Composite gained 461 points, or 2.96%, to 16,042.

Even beleaguered small-caps rose, with the Russell 2000 RUT rising 1%.

What’s driving markets

Both the S&P 500 and Dow are on track for their biggest weekly advance of 2024 after Nvidia Corp.’s blowout earnings after the bell on Wednesday stoked the biggest stock-market rally in more than a year, with the major indexes erasing losses from earlier in the week.

On Thursday, the S&P 500 saw its biggest percentage gain since Jan. 6, 2023, while the Nasdaq logged its best day since Feb. 2, 2023, according to Dow Jones Market Data.

While the Nasdaq saw its momentum fizzle on Friday, the S&P 500 and Dow continued to climb, with both indexes headed for their best week since Dec. 15, according to FactSet data.

Perhaps the biggest news in the stock market on Friday was the move in shares of Big Tech stocks like Nvidia NVDA, +2.16%. The chip company erased an opening pop that saw its shares climb 4% and its market capitalization briefly eclipse $2 trillion.

Market strategists attributed the drop in Big Tech stocks to profit taking.

“Usually if there is nothing to motivate the market to further highs, you’ll have this type of trading. Being a Friday, there’s an absence of macroeconomic news, there’s not much going on and it’s giving traders a reason to perhaps take some money off the table,” said Peter Cardillo, chief market economist at Spartan Capital Securities.

Weakness across shares of Big Tech and semiconductor names weighed on information technology, consumer discretionary and communications services stocks, which trailed the S&P 500. The only sector performing worse than those three on Friday was energy, driven by a 2% drop in U.S.-traded crude-oil futures that weighed on shares of Exxon Mobil Corp. XOM, -1.07% and other oil and gas firms, according to FactSet data.

Shares of Broadcom Inc. AVGO, -0.02% and Advanced Micro Devices AMD, -3.05% traded lower, alongside most of the Magnificent Seven stocks, although some members of the group flipped between modest gains and losses in choppy trade.

Aside from Nvidia, the group includes shares of Apple Inc. AAPL, -0.93%, Microsoft Corp. MSFT, -0.46%, Alphabet Inc. GOOGL, -0.18%, Amazon.com Inc. AMZN, +0.04% Meta Platforms Inc. META, +0.41% and Tesla Inc. TSLA, -2.28%

As technology stocks slid, falling Treasury yields helped boost shares of interest-rate sensitive stocks. The utilities sector emerged as the best performing on the S&P 500 Friday, followed by financials and then consumer staples, according to FactSet data. Gains outside the technology space disproportionally benefited the Dow, which remained on track for a fresh record high on Friday.

The yield on the 10-year Treasury note BX:TMUBMUSD10Y was down 2 basis points at 4.31% in recent trade after the yield on the benchmark U.S. government bond touched its highest level since Nov. 30 on Thursday, according to Dow Jones Market Data. Bond yields rise as prices fall.

Nvidia’s 16% Thursday surge coincided with the largest increase in market capitalization in the history of corporate America, leaving it as the third most valuable stock in the S&P 500, now ahead of both Alphabet GOOGL, -0.18% and Amazon.com AMZN, +0.04%.

Looking ahead, the economic calendar for next week includes two important prints, including the second estimate of GDP growth from the fourth quarter of 2023, and the PCE inflation index for January, the Fed’s preferred inflation gauge.

Investors will be watching to see if the PCE index reflects a larger-than-expected increase in consumer prices, like the CPI and PPI did earlier this month. If that happens, U.S. stocks could flounder like they did last week, Cardillo said. The three main indexes snapped five-week winning streaks on Feb. 16 as investors pushed back the expected timing of the first Fed rate cut.

Companies in focus

  • The latest earnings reports were mixed. Warner Bros. Discovery WBD, -9.36% shares tumbled after the company posted a wider-than-expected fourth-quarter loss.
  • Meanwhile, Block Inc.’s stock SQ, +19.98% surged Friday after the company reported stronger-than-expected margins and bottom-line growth late Thursday.
  • Carvana Co. CVNA, +31.17% shares soared Friday to a two-year high despite missing Wall Street’s earnings forecasts as investors cheered the company reporting a rise in gross profit per unit sold.
  • Intuitive Machines’ stock LUNR, +22.47% rallied after the company’s Odysseus spacecraft reached the moon and started sending signals back to Earth.
  • Intuit Inc.’s INTU, +1.34% stock rose, reversing aftermarket losses from Thursday evening when the company reported earnings that surpassed Wall Street’s expectations.
  • Sleep Number Corp. SNBR, +31.04% surged after the mattress maker posted a narrow-than-expected quarterly loss.
  • Rivian Automotive RIVN, -8.24% shares tumbled on Friday following a series of analyst downgrades and the company’s earnings miss on Wednesday. Concerns about slowing demand for electric vehicles also weighed on Tesla and shares of other EV makers, including U.S.-traded ADRs on China’s Nio Inc. NIO, -6.58%

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