On Thursday, US stocks ended higher across the board. Capital flowed into cyclical stocks and small-cap companies that stand to benefit from accelerating economic growth. The Russell 2000 index of small-cap stocks rose 1.74%.
Markets remain focused on Wall Street’s evaluation of Nvidia’s earnings as well as commentary from Federal Reserve officials.
During a speech on Thursday, Federal Reserve official Austan Goolsbee noted that the labor market has stabilized and hinted that a slower pace of rate cuts might be warranted. Goolsbee reiterated his support for further rate reductions but expressed openness to acting more cautiously.
His remarks reflect the Fed’s current debate, which has shifted from whether to cut rates to how quickly and by how much. Goolsbee, widely regarded as one of the Fed’s most dovish officials, emphasized the need to balance risks as the Fed navigates its monetary policy.
Although expectations for aggressive Fed rate cuts have softened recently, JPMorgan continues to take a bullish stance on US equities. The bank’s latest analysis predicts that the stock market will continue to rise in 2024, even after the S&P 500 has already gained over 50% since the start of 2023.
JPMorgan also believes that sectors outside of large-cap tech will likely catch up in the coming year, providing new growth opportunities.
Nvidia’s post-earnings stock movement was highly volatile on Thursday. The company’s share price initially climbed more than 4%, before dipping 3.5% and ultimately closing slightly higher. Wall Street analysts responded positively to the chipmaker’s results.
JPMorgan raised Nvidia’s price target from $155 to $170, citing the company’s significant competitive moat. Goldman Sachs forecasted that Nvidia’s revenue would surpass $200 billion in 2024 and raised its target price from $150 to $165.
Alphabet’s shares took a sharp hit as Google Class A (GOOGL) stock dropped 4.7%, reaching its lowest closing level in 11 months. Reports emerged that the US Department of Justice and several state governments are proposing sweeping reforms to address allegations of illegal monopolization in the online search market. One proposed measure includes forcing Google to divest its Chrome browser.
US Stocks
Fundamental Analysis:
The performance of large-cap tech stocks was mixed. Nvidia’s stock rose slightly and hit an intraday high, while Netflix extended its winning streak with its fourth consecutive record high. However, Google shares tumbled, while Amazon, Tesla, and Meta saw minor losses.
The broader semiconductor and industrial sectors performed well, with AMD rising 15%, Micron up 4%, and Deere & Co surging 8%, marking its largest single-day gain since February 2021.
Chinese ADRs showed mixed performance. The Nasdaq Golden Dragon China Index fell 1%. Pinduoduo shares dropped more than 10% following disappointing earnings, while iQIYI fell 7% and Baidu declined nearly 6%.
On the other hand, NIO and New Oriental Education gained over 1%.
Technical Analysis:
Market Trends:
- Dow Jones: +461.88 points (+1.06%), closed at 43,870.35
- Nasdaq Composite: +6.28 points (+0.03%), closed at 18,972.42
- S&P 500: +31.60 points (+0.53%), closed at 5,948.71
Hong Kong Stock Market
Fundamental Analysis:
Hong Kong’s major indices experienced intraday volatility and ultimately closed lower. Technology stocks saw mixed performance, with Tencent gaining nearly 1% while Alibaba and Meituan declined.
Semiconductor-related shares opened higher but weakened as the session progressed, with Hua Hong Semiconductor falling more than 5%. Apple component suppliers outperformed, with AAC Technologies jumping over 9%.
Baidu’s stock fell over 9% following disappointing quarterly results. The company’s third-quarter revenue of RMB 33.56 billion represented a 3% year-over-year decline, its largest drop in over two years. Net profit grew 14% year-over-year to RMB 7.63 billion, but adjusted net income under non-GAAP standards fell 19% to RMB 5.89 billion.
Analysts attributed the weak revenue performance to iQIYI’s underperformance, with its revenue dropping 10% year-over-year.
Technical Analysis:
Technical Analysis:
- Hang Seng Index: -1.31%, closed at 19,343.91
- Hang Seng Tech Index: -1.19%, closed at 4,306.34
- China Enterprises Index: -1.41%, closed at 6,935.91
FTSE China A50 Index
Fundamental Analysis:
Mainland Chinese stocks broadly declined, with over 3,800 individual stocks in the red as of midday. AI application stocks led the gains, while photovoltaic and innovative drug sectors lagged behind.
Key high-momentum stocks maintained strong performances, with Sunhouse achieving its 15th consecutive session of gains, including 13 limit-up days.
Technical Analysis:
Market Trends:
- Shanghai Composite Index: -0.99%, closed at 3,336.93
- Shenzhen Component Index: -0.91%, closed at 10,720.93
- ChiNext Index: -1.09%, closed at 2,241.26
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