The S&P 500 and Dow both closed at new highs as strength in the semiconductor stocks buoyed the entire market. This rally was driven by strong earnings results from Nvidia and Intel, both of which posted impressive Q4 2019 earnings reports. Subsequently, the Nasdaq closed above 8,941 for the first time in history.
The surge in semiconductor stocks was spurred by their latest earnings reports. Nvidia, a chipmaker, reported a 61 percent rise in revenue from the year prior, driven by demand from the gaming and data centre market. Long-term growth prospects are strong as the company is well-positioned to capitalize on the growing Kunst-AI and autonomous driving markets. Similarly, Intel reported stronger-than-expected Q4 2019 revenue with continued PC industry demand.
The strong performance by these two companies led to the Nasdaq reaching an all-time high. The Nasdaq Composite closed up 0.7 percent at 8,941, its highest close ever, supported by the semiconductor stocks. With the increase, the Nasdaq outpaced the gains of the S&P 500 and Dow, which closed up 0.29 percent and 0.12 percent, respectively.
In the technology sector, the semiconductor index soared 4.7 percent, the biggest gain in a single day since July 2018. Semiconductor stocks, such as those of Nvidia and Intel, make up 25.1 percent of the Nasdaq 100. Other top performers included Applied Materials and Lam Research, which both rose 4.1 percent and 4.5 percent, respectively.
While the semiconductor stocks led the Nasdaq higher, it should also be noted that markets overall have been driven by a solid trade-off between solid earnings and more accommodative policies from central banks. The expectations of easier monetary policy by the Federal Reserve have been a major factor in the rise of the markets in the past few months.
Overall, the Nasdaq’s impressive run up to a key high was driven by the performance of the semiconductor stocks. Although the market is facing headwinds, the Nasdaq is still up over 25 percent year-to-date, rising more than 2100 points. This continued strength in the semiconductors provides further evidence that the markets are making a solid trade-off between earnings and the outlook for a more accommodative Fed policy.