Riding The Wave Of Innovation: A Surge In Market Optimism | Opinion
Published March 11, 2024
As companies reported earnings in February, evidence of the broad acceptance and monetization of AI tools powered stocks to new record highs.
The Dow Jones was up 2.2 percent, reaching an all-time high of 39,131.53 on Feb. 23. The NASDAQ Composite ended the month at a closing record high of 18004.87, up 6.2 percent on the month and 8 percent for the year, fueled by three of its largest constituents: Nvidia, Amazon and Alphabet (Google). The S&P 500 also reached new highs, rising 5.2 percent in February and 6.8 percent year to date, surpassing 5,100. As of this writing, the S&P 500 has achieved 15 new highs since the beginning of the year.
History says February is a terrible month for the market, so what happened?
On Feb. 21, AI chip maker Nvidia reported Q4 2023 earnings which handily beat analyst estimates and, more importantly, gave positive guidance for continued strong growth in 2024. As of the end of February, Nvidia stock was up over 25 percent on the month, 60 percent for the year-to-date and 249 percent for the trailing 12 months.
The day after reporting earnings, the chipmaker added $277 billion to its stock market valuation, the largest daily gain ever achieved by a single company. Its market capitalization reached $2 trillion. The AI halo effect spread to other technology stocks and then to the market as a whole, underscoring the adage that “a rising tide raises all boats, even the leaky ones.”
Economic data released in February reflected the ongoing balance between inflationary pressures, employment and the underlying strength of the U.S. economy. The CPI, which measures the average change over time in the […]