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February 24, 2024 Market Update

The U.S. stock market rebounded last week, rising approximately 1.4%, based on Vanguard Total Stock Market Index Fund ETF (VTI).  Equities have now rallied in six of the past seven weeks and reached yet another record high at Friday’s close.

The bond market, on the other hand, continued to meander near the lower end of a trading range as interest rates ticked up.  The Vanguard Total Bond Market ETF (BND), a proxy for fixed-income securities, rose 0.3% last week.  Although the gain marks its first weekly advance in February, BND continues to trade near its lowest level of the year.

Nvidia, which controls about 80% of the high-end artificial intelligence (AI) chip market, saw its stock price jump last week, fueled by the release of its fourth-quarter earnings report that far exceeded analyst expectations.  The company’s net income rose $12.3 billion in the quarter, a 770% increase when compared with the same period last year. 

The lion’s share of Nvidia’s rally last week was on Thursday, when the chipmaker’s stock market value rose an astonishing $273 billion in a single day -- a new Wall Street record that eclipsed the entire value of Coca-Cola’s stock.  Still, rising estimates of Nvidia’s future earnings means Nvidia's valuation has fallen based on this metric, even though its stock price more than tripled last year.

The doubling of Nvidia’s market value to $2 trillion over the past eight months ranks as the fastest for U.S. companies and unfolded in less than half the time for comparable increases for tech firms Apple and Microsoft.

Nvidia now accounts for more than a quarter of the S&P 500 index increase year-to-date.  As a result, where this widely tracked index goes from here will depend in no small measure on whether Nvidia can realize its promise.  It’s no surprise, then, that Goldman Sachs has labeled Nvidia the “most important stock on planet Earth.”

That’s all for now.  Have a great weekend and invest wisely my friends.