NVDA pushes S&P 500 to a new high - Creand
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NVDA pushes S&P 500 to a new high

The S&P 500 and Dow Jones moved further into record territory last week and the Nasdaq broke its short losing streak. Most of the action over this shortened week occurred on Thursday as investors reacted to another surprisingly good quarter from NVIDIA (NVDA).  NVDA gained 8.5% during the week, surpassing $2 trillion market-cap for the first time, and leaving its gain this year just below 60%. The Semiconductor Index (SOX) jumped 1.9% and the Vanguard Mega Cap Growth ETF (MGK) gained 1.6% on the week.  The Invesco S&P 500 Equal Weight ETF (RSP) lagged a bit behind with a gain of 1.2%.  

NVIDIA’s report renewed the market’s enthusiasm for AI-related stocks, semiconductors, and growth stocks in general.  This helped the technology sector gain 2.0% during the week, trailing only the consumer staples sector (+2.1%). All 11 S&P 500 sectors registered gains this week, but the energy (+0.4%) and real estate (+0.9%) sectors lagged the index.

The market drew added support from ongoing optimism about rate cuts following comments from Fed officials.  Fed Vice Chair Philip Jefferson, who said on Friday that it will likely be appropriate to begin cutting rates later this year, adding that he is cautiously optimistic about the way inflation is evolving. Also, Philadelphia Fed President Patrick Harker said he believes the Fed may be in a position to see the fed funds rate decrease this year, but cautions anyone looking for it right now and right away.   

Separately, Capital One (COF) looks to shake things up in the payment card industry, announcing its agreement to purchase Discover Financial Services (DFS) in an all-stock transaction valued at $35.3 billion, representing an over 26% premium to DFS’s closing price on Friday.  While the combined company will still be significantly smaller than the third largest financial services firm specializing in payment cards in American Express (AXP), the merger of COF and DFS would create a more formidable foe in the industry. COF currently relies heavily on Mastercard (MA) and Visa (V) to issue its credit cards. The merger with DFS could lead to COF transitioning at least some of its credit card products to the Discover network.  However, the deal may face significant regulatory hurdles as prominent politicians on both sides of the aisle have come out against the deal.

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