The stock market observed a remarkable performance on Thursday, with the Dow Jones Industrial Average achieving an unprecedented closing figure, reflective of a robust analysis of recent economic indicators and corporate earnings, particularly spotlighting the results from Nvidia ($NVDA). The Dow closed with an impressive increase of 0.6%, reaching 41,335.1 points.
Meanwhile, the Nasdaq Composite experienced a slight dip of 0.2% to finish at 17,516.4, while the S&P 500 remained relatively stable, recording minimal changes at 5,592. Within market sectors, energy stocks led the upward momentum, while the technology sector faced the largest downward shift. In economic developments, the real gross domestic product (GDP) of the United States showed a promising growth of 3% on an annualized basis for the second quarter.
This figure was an improvement from the initially estimated 2.8% rate as reported by the Bureau of Economic Analysis. Bloomberg’s consensus forecast had also anticipated a more modest 2.8% reading. Analysts at TD highlighted a favorable ‘Goldilocks’ economic scenario, suggesting that growth could gradually decrease throughout the latter half of the year, facilitating a decline in inflation towards the Federal Reserve's targeted 2% benchmark.
As a result, this economic backdrop is expected to provide the Federal Open Market Committee (FOMC) with the rationale to reduce interest rates by at least 75 basis points by year-end. Furthermore, weekly reports indicated a decrease in new applications for unemployment insurance in the U.S., with insights from Oxford Economics pointing towards a stable labor market devoid of significant layoff pressures.
The Fed's commitment to a rate cut was confirmed for September as a precaution against potential labor market vulnerabilities, although data does not support a more extensive cut exceeding 25 basis points, according to brokerage assessments. In the realm of housing, pending home sales marked a decline last month, reaching the lowest levels in records dating back to 2001, as disclosed by the National Association of Realtors.
On the bonds front, the yield on two-year U.S. treasuries rose by 2.8 basis points to settle at 3.9%, while the 10-year bond yield saw an uptick of 2.4 basis points, closing at 3.87%. On the corporate scene, Nvidia, the prominent chipmaker, reported second-quarter fiscal results that outperformed Wall Street anticipations, largely driven by soaring demand for generative artificial intelligence solutions, resulting in record-breaking revenue.
Despite this surge in revenue forecasts, Nvidia's stock experienced a 6.4% decline on Thursday, marking it as one of the steepest drops within both the S&P 500 and the Nasdaq indexes. The company anticipates consolidated revenue for the third quarter to hover around $32.5 billion, with an allowable deviation of 2%.
However, this forecast, while exceeding Street expectations, fell short of prior anticipations that many investors had projected in the range of $33 billion to $34 billion, according to a report from UBS Securities. Overall, key performance indicators for Nvidia remain bullish, according to brokerage evaluations.
Another notable company, Best Buy ($BBY), saw its shares surge by 14%, standing out as the leading gain in the S&P 500 index. This positive momentum was attributed to the electronics retailer's upward revision of its full-year earnings outlook post better-than-anticipated fiscal second-quarter achievements, bolstered by significant gains in tablet and computing segments.
Cooper ($COO) also rose to prominence as the second-best performer within the S&P 500, witnessing a robust nearly 12% rise following commendable fiscal third-quarter results released late Wednesday. Conversely, Dollar General ($DG.US) saw a staggering plummet of 32%, marking it as the worst performer on the S&P 500 after the discount chain adjusted its full-year outlook downward amidst flagging sales trends.
The fiscal second-quarter numbers failed to meet expected benchmarks, impacting investors negatively. In a parallel situation, Dollar Tree ($DLTR) shares faced a 10% decline, placing it as the second largest drop on the S&P 500 and the steepest on the Nasdaq. In commodity news, West Texas Intermediate crude oil prices increased by 1.8%, reaching $75.89 per barrel, with ongoing supply anxieties related to Libya contributing to this uptick, according to analyses from D.A.
Davidson. Gold prices witnessed a 0.7% increase, settling at $2,555.10 per troy ounce, while silver also edged up by 0.6%, reaching a price of $29.81 per ounce..