Updated February 23rd, 2024 at 23:02 IST

AI-led rally on Wall Street fizzled out, Nvidia pares gains

Nvidia's blowout forecast had boosted investor confidence in the potential for AI.

Reported by: Business Desk
Wall Street news | Image:Unsplash
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IA led stocks: The main indexes of Wall Street lost their steady movement on Friday following a rally fueled by fanfare around Artificial Intelligence (AI) that briefly vaulted Nvidia to over $2 trillion in market valuation for the first time. The S&P 500 and Dow Jones Industrial Average closed at record highs on Thursday after Nvidia's blowout forecast that boosted investor confidence in the potential for AI. 

The company on the same day saw an addition of $277 billion in stock market value, Wall Street's largest one-day gain in history as shares rallied. After a sharp advance, shares of the chip designer shuttled between gains and losses after the first hour of trading on Friday, and were last up 1.2 per cent.

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Notably, many other big tech and growth stocks, which had been hit in the AI influence in the previous sessions lost ground, with Apple, Alphabet and Tesla falling between 0.4 per cent and 1.4 per cent. Shares of Super Micro Computer, another beneficiary of the AI rally, dropped 13.5 per cent after the server component maker priced its convertible notes.

The declines dragged the tech-heavy Nasdaq Composite down 0.19 per cent, at 16,011.74 by 11:39 a.m. ET. The index was, however, close to its all-time high hit in November 2021. "This is much more of puts and takes of what's been a very solid week and folks thinking about how they want to be positioned going out over the weekend," said Art Hogan, chief market strategist at B Riley Wealth.

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That said, Hogan noted a bright outlook for Nvidia and AI-related stocks going ahead.

"We are certainly continuing to get new evidence that artificial intelligence is going to drive a lot of excitement in equity markets. Clearly they (Nvidia) have more runway in front of them." The Dow Jones Industrial Average was up 128.80 points, or 0.33 per cent, at 39,197.91, the S&P 500 was up 5.44 points, or 0.11 per cent, at 5,093.08. All the three major indexes were set for weekly gains after turbulence in the prior week when hotter-than-expected inflation data dampened expectations of early interest rate cuts from the U.S. Federal Reserve.

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Traders firmed up bets against any U.S. interest-rate cuts before June after Fed Governor Christopher Waller on Thursday said he was in "no rush" to lower rates. Among other stocks, Carvana surged 31.4 per cent on reporting its first-ever annual profit, helped by its pact with bondholders to cut its outstanding debt by $1 billion. 

(With Reuters inputs) 

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Published February 23rd, 2024 at 23:02 IST