Nasdaq Hits All-Time High: Analyst Explains Why

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Nasdaq Hits All-Time High: Analyst Explains Why

  • NASDAQ surged 108.91 points to 16,794.87, fueled by Fed comments on interest rate stability and anticipation of retailer and Nvidia results.
  • Tech stocks rose, with Nvidia nearing $24.6 billion in earnings and Microsoft shares up 5% in five days due to AI developments.
  • Retail and cruise sectors showed mixed performance; Macy’s gained 5%, Lowe’s fell 3%, and Norwegian Cruise Lines jumped 7.6%.

NASDAQ touched 16,794.87 after rallying 108.91 points in one day. Comments by the Fed hinting at the stability of interest rates and anticipation of results from retailers and Nvidia Corp. helped fuel the rally.

US stocks are having a high time as expectations of a soft landing gather momentum and companies post positive results. The S&P 500 rose 13.28 points closing at 5321.41 which was its 24th record closing for this year. The Dow Jones ended just below 40,000 at 39,872.99.

US Index Performance | Source: DIJA
US Index Performance | Source: DIJA

Tech Stocks Are on the Rise

The tech sector gained on the anticipation of Nvidia’s earnings that can clock in at $24.6 billion or more. The company’s share price has recently touched a new high, closing in at $953.86.

Microsoft shares have been up 5% in the last five days amid new AI developments, such as AI-focused laptops.

The retail sector also made news as Macy’s (M) and Lowe’s posted earnings (LOW). The former registered an increase of 5% while the latter fell by 3%.

Norwegian Cruise Lines supported the market, posting a gain of 7.6% as its financial forecasts were better than what analysts had expected. Its competitors, such as Carnival and Royal Caribbean Group, rose 7.3% and 4.1%, respectively.

After the closing, Toll Brothers (TOL) revealed its earnings, which stood at $4.55 per share, easily sitting atop $2.85 last year. TOL also reported an increase in home sales at $2.65 billion beating analysts’ expectations of $2.52 billion.

Urban Outfitters (URBN) was another one to beat expectations with the Q1 earnings per share at 69 cents and a $1.2 billion revenue versus the $1.17 billion anticipated – a 5% YoY gain.

NASDAQ Forecast: What Analysts Predict

Looking forward, there are some important reports this week, with Nvidia’s earnings at the top of the list.

Comments by the FOMC on May 22 will garner much attention, and the tone of the minutes will decide the future of the stock markets. Next to that are the Initial jobless claims, which are estimated to be at 220,000.

While many analysts believe that we are heading for a soft landing, a deeper view of the global economy suggests that it is more complicated than that.

Mark Rossano of C6 Capital Holdings recently wrote for Primary Vision Network that we might be in for a prolonged soft landing. Conference Board’s leading economic index has once again entered negative territory, and the trend is “flat to down.”

Source: Primary Vision Insights
Source: Primary Vision Insights

Furthermore, sticky inflation has eaten up people’s savings as more and more people have been drawing down their 401ks. A recent report by the Bureau of Economic Analysis shows that the Core PCE price index, a closely watched measure of inflation, rose 3.7%, which makes it difficult for the Fed to start cutting interest rates.

Source: Primary Vision Insights
Source: Primary Vision Insights

Analysts expect increased volatility in the stock market in the upcoming weeks as geopolitical uncertainties may cause wild swings. The above-mentioned reports and, most importantly, the Fed’s minutes will clarify the direction of the U.S. and global economy.