Forefront Market Notes: February 26th, 2024

Stocks vaulted to new heights last week on the back of an artificial intelligence (AI) semiconductor company, marking investors’ belief that AI has the potential to transform the U.S. economy.

 

Stocks Rally to Record Highs

Stocks traded in a fairly tight range for the first half of the short week, yawning at the lack of economic data while awaiting earnings results from one key company that creates chips that power the artificial intelligence operations of many firms.

A strong Q4 corporate report and long-term message from Nvidia Corp. pushed the S&P 500 and Nasdaq to new closing highs on Thursday.

Nvidia’s market cap rose by $277 billion on the news, pushing it to a $2 trillion valuation. To put that in perspective, Nvidia’s market cap is now roughly the same size as Canada’s economy. Its 16% gain on Thursday was the largest one-day market cap increase by any U.S. company.^1,2

Remember, companies mentioned are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of any company connected with AI.

 

^{Source: YCharts.com, February 24, 2024. Weekly performance is measured from Friday, February 16 to Friday, February 23.
ROC 5 = the rate of change in the index for the previous 5 trading days.
TR = total return for the index, which includes any dividends as well as any other cash distributions during the period.
Treasury note yield is expressed in basis points.}

 

Inflection Point?

Nvidia’s seismic increase in market cap gave investors pause for reflection, wondering whether this marked an inflection point for artificial intelligence.

The main story that investors took away was that, because of its market dominance as the leading global provider of AI computer chips, Nvidia served as a proxy for AI. Some of the world’s most influential companies rely on Nvidia technology to power their own AI initiatives. Investors appear to have concluded that AI’s impact may just be starting, and anticipate it will be a driving economic force in 2024 and beyond.^3,4

 

Be on Alert for IRS Scams

This tax season, the IRS expects an uptick in tax-related scams. In most cases, IRS “phishing” scams come in the form of bogus phone calls and emails that claim to come from the IRS.

Remember, the IRS will never:

• Call you without mailing an official notice first.
• Demand that you immediately pay your taxes over the phone.
• Take a debit or credit card number over the phone.
• Threaten to call law enforcement or immigration services to arrest you for failure to pay.

*This information is not intended to be a substitute for specific, individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov⁵

 

Footnotes and Sources

 

^{1. MarketWatch.com, February 22, 2024.}

^{2. US News & World Report, February 22, 2024.}

^{3. CNBC, February 21, 2024.}

^{4. The Wall Street Journal, February 22, 2024.}

^{5. IRS.gov, November 20, 2023}