On Monday, February 12th, the main indexes of Wall Street exhibited subdued movement, as investors braced themselves for two pivotal inflation reports scheduled for the week. These reports hold the potential to offer insights into the trajectory of interest rate cuts. Concurrently, Nvidia, propelled by the fervor surrounding artificial intelligence (AI), eclipsed Amazon in terms of market capitalization, marking a significant milestone in its trajectory.
Nvidia Surpasses Amazon in Market Value
Nvidia’s ascent above Amazon.com in market capitalization underscored the relentless momentum behind the chipmaker, positioning it as the fourth most valuable company in the United States. Amid this development, Nvidia’s shares edged up by 0.5%, while Amazon’s saw a modest uptick of 0.1%. The surge in megacaps, particularly those heavily vested in AI, has been instrumental in driving the broader Wall Street rally. Additionally, buoyant sentiments regarding imminent rate cuts and a positive business outlook have bolstered this surge.
Wall Street’s Rally and Milestones
Wall Street’s upward trajectory, spanning four months, has seen notable milestones, including the S&P 500 breaching the psychological barrier of 5,000 points and the Nasdaq momentarily surpassing the 16,000 mark. This continued surge brings the Nasdaq closer to its all-time high recorded in November 2021.
Peter Cardillo, Chief Market Economist at Spartan Capital Securities, remarked, “We are at hefty levels and the real question out there is how much longer can this market continue to rally without any new serious catalyst on the way.” This sentiment reflects a cautious optimism prevalent among investors, with a keen eye on forthcoming macroeconomic indicators.
Anticipation for Inflation Reports
Traders are eagerly awaiting the release of January’s Consumer Price Index (CPI) and Producer Price Index (PPI), which are expected to provide crucial insights into the timing of monetary policy adjustments in the coming months. Additionally, key data releases throughout the week, encompassing industrial production, retail sales, and the preliminary University of Michigan consumer sentiment, will further inform market sentiments.
Central Bankers’ Response
In response to a string of robust economic data, central bankers have adopted a cautious stance, pushing back against anticipations of early rate cuts. Odds for a 25-basis-point rate reduction in May have dwindled to 61%, down from over 95% at the outset of 2024, as indicated by the CME FedWatch Tool. Traders will closely scrutinize remarks from Federal Reserve officials, including Richmond President Thomas Barkin and Minneapolis Chief Neel Kashkari, for any indications regarding the timing of rate adjustments.
Market Performance and Sectoral Movements
As of 9:51 a.m. ET, the Dow Jones Industrial Average witnessed a marginal uptick of 0.05%, standing at 38,692.73 points. Similarly, the S&P 500 and the Nasdaq Composite posted marginal gains of 0.02% and 0.04%, respectively. Notable movers include Diamondback Energy, which surged by 7%, propelling the energy sector to the forefront with a gain of 0.8%. This surge followed the announcement of a landmark $26 billion deal to acquire Endeavor Energy Partners, the largest privately held oil and gas producer in the Permian basin.
Conversely, Citigroup experienced a slight decline of 0.8% in response to reports indicating regulatory scrutiny and internal oversight challenges. On a brighter note, Joby Aviation witnessed a 3.5% increase after signing an agreement to launch air taxi services in the Emirate by early 2026.
Advancing issues outnumbered decliners by a ratio of 3.18-to-1 on the NYSE and 2.36-to-1 on the Nasdaq. The S&P index recorded 25 new 52-week highs, with no new lows, while the Nasdaq witnessed 93 new highs and 13 new lows.
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Wall Street’s cautious optimism prevailed on Monday, as investors brace themselves for a data-heavy week, punctuated by pivotal inflation reports. Nvidia’s ascent above Amazon’s market value underscored the fervor surrounding AI-related companies, contributing to the broader market rally. Traders remain attentive to central bank communications and forthcoming economic indicators, which are poised to shape market sentiments in the days ahead.
Featured image credit: JasonDoiy via iStock