Wall Street indexes post record closing highs as Nvidia jumps, megacap earnings ahead
A smartphone with a displayed NVIDIA logo is placed on a computer motherboard in this illustration taken Mar 6, 2023. (Photo: REUTERS/Dado Ruvic/Illustration)
NEW YORK: All three major US stock indexes posted record closing highs again on Tuesday (Oct 28) as Nvidia shares gained following news it will build artificial intelligence supercomputers for the US energy department, and as investors were optimistic about corporate earnings ahead of key results from megacaps this week.
Nvidia CEO Jensen Huang said the company will build seven supercomputers for the US Department of Energy, and said the company has US$500 billion in bookings for its AI chips.
Nvidia's stock closed up 5 percent, adding over US$230 billion in market value and putting the company on the verge of becoming the first worth US$5 trillion.
Also boosting the market, Microsoft's shares gained 2 percent after the company reached a deal that allows OpenAI to restructure into a public benefit corporation while giving Microsoft a stake of 27 percent in the ChatGPT maker.
Quarterly results are expected this week from Apple, Microsoft, Alphabet, Amazon, and Meta Platforms. Investors are anxious for details from the companies on AI spending. Shares of Apple ended up just 0.1 percent, with the company earlier crossing US$4 trillion in market value for the first time.
"Momentum and earnings are pushing the market higher," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "Earnings have been good," he said. "Of course, we're waiting for the big tech stocks."
Investors were also digesting trade-related news. The Wall Street Journal said US President Donald Trump and Chinese leader Xi Jinping will discuss a trade framework to reduce US tariffs on Chinese goods in exchange for Beijing’s commitment to curb exports of fentanyl precursor chemicals.
The Dow Jones Industrial Average rose 161.78 points, or 0.34 percent, to 47,706.37, the S&P 500 gained 15.73 points, or 0.23 percent, to 6,890.89, and the Nasdaq Composite gained 190.04 points, or 0.8 percent, to 23,827.49.
Trump lavished praise on Japan's first female leader, Sanae Takaichi, in Tokyo on Tuesday. They signed a deal to bolster supplies of critical minerals and rare earths, as their nations seek to reduce China's dominance of some areas of key electronic components.
QUARTERLY EARNINGS UP
With results in from 180 of the S&P 500 companies, third-quarter earnings are estimated to have increased 10.5 percent from the year-ago period, up from earlier estimates for the quarter, according to LSEG data.
On Wednesday, the Federal Reserve is widely expected to announce a 25-basis-point interest rate cut. Investors will be keen to get any details on the rate outlook, especially given that the US government has been shut down for nearly a month, delaying crucial economic data and forcing traders to rely on private releases and corporate announcements.
A preliminary estimate of an ADP National Employment Report showed the US economy added an average of 14,250 jobs in the four weeks ending Oct 11.
Even though the ADP data seemed to be positive, it was tempered by layoff announcements by big companies such as Amazon and others, analysts said.
Shares of United Parcel Service jumped 8 percent after the company posted better-than-expected quarterly results in a sign its overhaul is making headway. UPS has been shuttering hundreds of facilities, slashing thousands of jobs and offering buyouts to its union drivers as part of its largest-ever overhaul, which aims to reduce costs by US$3.5 billion in 2025.
After the closing bell, shares of Visa edged higher after the company reported a rise in quarterly adjusted profit amid strong transaction volumes. Visa's stock ended the regular session down 0.3 percent.
Declining issues outnumbered advancers by a 1.35-to-1 ratio on the NYSE. There were 613 new highs and 102 new lows on the NYSE. On the Nasdaq, 1,868 stocks rose and 2,862 fell as declining issues outnumbered advancers by a 1.53-to-1 ratio.
Volume on US exchanges was 20.5 billion shares, compared with the 20.96 billion average for the full session over the last 20 trading days.
