JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Nasdaq and S&P 500 trading in record territory
- Crude oil prices fall
- Treasury yields decline
When traders take a breather from the noise surrounding them —much of it negative in recent months — and look closer at what’s happening in the markets, it becomes clear the U.S. stock market is the best place to park their money compared with other locations. It’s hard to argue against the mostly positive risk-reward ratio we’ve seen over multiple decades.
A small group of stocks, mostly geared toward the booms in artificial intelligence (AI), is fueling the market rally we’re seeing despite all the adverse geopolitical news. Nvidia is driving that list as it moves toward $6 trillion in market capitalization, a landmark move as investors rotate back into the chipmaker’s shares. Nvidia is the powerhouse on both the S&P 500 Index and the Nasdaq Composite, accounting for roughly 8.15% on the S&P 500 Index and 13.2% on the Nasdaq, according to published reports.
The so-called Magnificent 7 – Nvidia, Alphabet, Amazon, Apple, Meta, Microsoft and Tesla – - command more than 40% of the market cap of the S&P 500, according to Fidelity Investments. When you consider that much girth among a small handful of stocks, it’s apparent how much these stocks’ daily movements dictate the direction of the S&P 500 and the Nasdaq, both of which are in record territory again today.
Nvidia shares hit a record $238.90 peak at Monday’s close and is heading 1.13% to the upside in early trading, at $241.62. It needs to hit $248.96 to reach $6 trillion in market capitalization, which is roughly a 4.2% move to the upside from Monday’s close. Stay tuned.
Among some other Mag 7 stocks, Amazon is up 0.69%, Apple by 0.30%, Microsoft by 1.5% and Tesla by 0.65%. Alphabet and Meta are ticking 0.20% and 0.17% lower respectively.
In early trading, both the Nasdaq and the S&P 500 hit record terrain again, with the Nasdaq up 0.70% and the S&P 500 tracking higher by 0.73%. The price-weighted 30-stock Dow Jones Industrial Average, which contains five of the Magnificent 7 stocks including Nvidia, is moving 0.72% to the upside.
Treasury bond yields and crude oil prices are retracting. WTI Crue Oil is down 1.71% to the high-$87 a barrel range and the 10-year yield is down 5.3% to 5.29%.
Elsewhere, Google parent Alphabet reached a 20-year power purchase pact valued at $4.3 billion with Constellation Energy to provide power from 11 of its nuclear units in Illinois, Pennsylvania and New Jersey. Constellation shares were higher by 14.7% while Alphabet shares fell 0.51%.
SpaceX shares are moving back into their post-initial public offering range, higher by 2.64%. after Wall Street analysts upped their price targets on the rocket and space craft maker. Morgan Stanley analyst Adam Jone reiterated his overweight rating and $300 price target, which is roughly 71% higher than its current trading range.
Lower crude oil prices are also giving rise to airline stocks, which have been hit hard by higher costs amid the turmoil in the Strait of Hormuz. United Airlines shares are adding 4.25%, while Delta Air Lines is advancing 3.07% with American Airlines up 2.77% and Southwest Air moving 2.72% higher.
Happy Trading!
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