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By Alden Bentley and Davide Barbuscia

(Reuters) – The spreads between both investment-grade and junk-rated corporate bond yields and U.S. Treasuries have fallen to their narrowest level in more than two years, in a sign of overall investor confidence growing.

The spread on the ICE BofA U.S. Corporate Index, a commonly used benchmark for high-grade debt, declined to 93 basis points on Thursday, its lowest since November 2021.

On the ICE BofA U.S. High Yield Index, a commonly used benchmark for junk bonds, the option adjusted spread dipped to 322 basis points, its lowest since January 2022.

These spreads reflect how much extra yield investors demand to hold corporate bonds over Treasury notes and bonds, which are considered the safest financial instruments because there is a near-zero chance of default by the U.S. government.

“The additional premium you get over risk-free securities is very slim,” said Anthony Woodside, head of U.S. fixed income strategy at LGIMA. But, he added, “investors are looking at all-in yields.”

Spreads are seen as gauge of market confidence. Strong demand for junk bonds in particular is seen as an optimistic signal, with narrowing spreads indicating investors see financial conditions as healthy and are less worried about corporate default.

The junk spread surged to over 1,000 bp in March 2020 as the onset of the COVID-19 pandemic fanned market panic.

The High Yield Index itself is near a record high set early this month. Meanwhile, the ICE BofA U.S. Investment Grade corporate bond index fell to a two-month low last week.

Market optimism has been driven by a record-breaking Wall Street rally and a surprisingly resilient economy which have lifted Treasury yields this year.

In the week to Wednesday, as the S&P 500 hit record highs, investors put $15.2 billion into bonds, including $10.2 billion into investment-grade bond funds, which logged a 16th straight week of inflows, the longest such stretch since October 2021, Bank of America Global Research said on Friday.

(Reporting by Alden Bentley and Davide Barbuscia, Editing by William Maclean and Alexander Smith)

By Aditya Soni and Patturaja Murugaboopathy

(Reuters) -Nvidia briefly hit $2 trillion in market value for the first time on Friday, riding on an insatiable demand for its chips that made the Silicon Valley firm the pioneer of the generative artificial intelligence boom.

The milestone followed another bumper revenue forecast from the chip designer that drove up its market value by $277 billion on Thursday – Wall Street’s largest one-day gain on record.

Its rapid ascent in the past year has led analysts to draw parallels to the picks and shovels providers during the gold rush of 1800s as Nvidia’s chips are used by almost all generative AI players from chatGPT-maker OpenAI to Google.

That has helped the company vault from $1 trillion to $2 trillion market value in around eight months – the fastest among U.S. companies and in less than half the time it took tech giants Apple and Microsoft.

“For AI companies today – the leaders of the sector – what’s going to be binding for them is not going to be demand. It’s just going to be their capacity to answer the surging demand,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Nvidia’s shares were last trading 0.6% lower, giving it a market value of about $1.95 trillion. They had risen as much as 4.9% to a record high of $823.9 earlier in the session, after a more than 16% jump on Thursday.

The shares have surged nearly 60% this year, after more than tripling in value in 2023. The chip designer’s 2024 share surge has been crucial to the S&P 500’s gains, contributing to more than a quarter of the stock index’s rise this year.

Its latest market-beating forecast of a whopping 233% growth in first-quarter revenue helped global markets notch record highs on Thursday.

The breakneck growth has drawn analysts and investors from far and wide to Nvidia.

“I’m a European fund manager, but I must have had more emails about their results than I’ve had about any other set. There have been calls, every broker doing 10-minute debriefs, it’s been mind boggling,” said one investor, who declined to be named.

Despite the share surge, Nvidia’s valuation has fallen due to rapid increases in analysts’ estimates. It has a 12-month forward price-to-earnings ratio of about 31, down from 49 times a year ago, according to LSEG data.

“Leading cloud computing companies plan to boost their capital expenditure to satisfy demand for AI training and inference, and it appears that virtually all this spending will fall into Nvidia’s pockets,” said Brian Colello, a strategist at Morningstar.

“We anticipate revenue will rise by a couple of billion each quarter throughout fiscal 2025 for Nvidia as more chip supply comes online.”

(Reporting By Aditya Soni, Amruta Khandekar, Patturaja Murugaboopathy and Gaurav Dogra in Bengaluru and Alun John in London; Editing by Barbara Lewis and Arun Koyyur)

By Karen Brettell

NEW YORK (Reuters) – The U.S. dollar index was on track for its first weekly fall in 2024 on Friday as investors took a breather from buying the currency following an almost two-month rally built on expectations the Federal Reserve will begin cutting rates later than previously expected.

Investors have pushed back expectations for the first Fed rate cut to June, from May, and dramatically reduced how far they see the U.S. central bank cutting its benchmark rate. Fed officials have projected three 25 basis point cuts this year, while markets had priced for as many as seven.

“The dollar’s rally this year has been predicated on the markets converging back to the Fed,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.

Traders may also be pricing for the likelihood that economic data will begin to slow. “I think starting with the February jobs data, which is due March 8, we’re going to begin seeing a series of weaker U.S. economic data,” Chandler said.

Personal Consumption Expenditures (PCE) due next week may also provide clues for Fed policy.

The dollar index dipped 0.06% on Friday to 103.86. It has bounced from a five-month low of 100.61 on Dec. 28 and is holding below a three-month high of 104.97 reached on Feb. 14.

The greenback has bounced this year on enduring economic strength and as Fed officials caution against cutting rates too soon as they seek to bring inflation back closer to their 2% annual target.

Now, however, investors are waiting on further economic indicators for further clues on monetary policy.

“It’s not the time yet to sell the dollar, but we think it will start to weaken in the second quarter, assuming that the Fed will cut in June and continue cutting rates once a quarter,” said Athanasios Vamvakidis, global head of G10 forex strategy at BofA Global Research.

BofA expects the euro to strengthen to 1.15 versus the greenback by the end of the year.

“If the U.S. economy remains so strong, we have to change our view, as the Fed might not be able to cut in June or not even this year,” he added.

Improved risk appetite that has seen stock markets set records in several countries this week may have also reduced demand for the U.S. currency, which is seen as a safe-haven.

The euro was little changed on the day at $1.0823. It has dropped from $1.11395 on Dec. 28, but is up from $1.0695 on Feb. 14.

German business morale improved in February, a survey showed on Friday, though probably not enough to prevent Europe’s biggest economy from slipping into another recession.

YEN WORST PERFORMER

The yen is the worst-performing G10 currency this year, with the greenback gaining 6.6% against the Japanese currency. The dollar fell 0.11% to 150.34 yen on Friday.

The Japanese currency is headed for a fourth weekly drop as investors chased better yields just about everywhere else, wagering Japan’s rates would stay near zero for some time.

With the Fed expected to hold rates higher for longer, investors are staying in carry trades in which they sell or borrow the yen and invest in higher yielding currencies.

“For the dollar/yen to weaken, we need the Fed to start cutting rates,” said BofA’s Vamvakidis.

In cryptocurrencies, bitcoin fell 1.14% to $51,050.

(Reporting by Karen Brettell; Additional reporting by Stefano Rebaudo; Editing by Mark Potter)

By Noel Randewich and Medha Singh

(Reuters) -Nvidia added $277 billion in stock market value on Thursday, Wall Street’s largest one-day gain in history after the heavyweight chipmaker’s quarterly report beat expectations and reignited a rally fueled by optimism about artificial intelligence.

The company’s stock soared 16.4% to close at $785.38, a record-high close, lifting its market capitalization to $1.96 trillion after its January-quarter report late on Wednesday showed demand for its specialized chips used in AI computing continued to outpace analysts’ already-high expectations.

The Santa Clara, California-based company’s results fed new fuel to a global rally in technology stocks linked to AI, propelling the S&P 500, Europe’s STOXX 600 and Japan’s Nikkei share average to record highs.

Traders exchanged $65 billion worth of Nvidia’s shares on Thursday, accounting for almost a fifth all trading in S&P 500 stocks.

Nvidia’s one-day increase in stock market value was the largest in Wall Street’s history, easily beating a record $196 billion gain by Meta Platforms on Feb. 2 after the Facebook parent declared its first dividend and posted robust results.

The rise in Nvidia’s market value on Thursday eclipsed the entire value of Coca-Cola, at $265 billion.

Its gain made Nvidia the U.S. stock market’s third-most valuable company, pulling ahead of Amazon.com and Alphabet after jockeying with the two tech powerhouses in recent weeks.

Microsoft and Apple, valued at $3.06 trillion and $2.85 trillion, respectively, are Wall Street’s two most valuable companies.

Nvidia’s stock has now climbed 58% in 2024, accounting for more than a quarter of the S&P 500’s increase year-to-date. That makes Nvidia’s outlook crucial not just for direct shareholders, but for owners of index funds widely held in retirement savings accounts.

“The people who made the most money in the gold rush of the mid-1800s were the ones providing the tools to get the job done, not those hunting for the precious metal,” said Russ Mould, investment director at AJ Bell.

“Nvidia is effectively playing the same role today in this tech revolution.”

Soaring demand for Nvidia’s chips used by companies rushing to upgrade their AI offerings helped the Silicon Valley firm forecast a whopping 233% growth in current-quarter revenue, above market expectations of a 208% rise.

Other chipmakers exposed to AI also rallied, with Advanced Micro Devices jumping about 11% and Broadcom adding 6.3%. The Philadelphia chip index rallied 4.97% to a record high in its biggest one-day gain since May 2023.

The S&P 500 surged 2.11% to a record high, and the Nasdaq jumped nearly 3%, leaving it just short of its first record-high close since November 2021.

Super Micro Computer, which sells AI-related server equipment, jumped over 30%, bringing its gain this year to over 240%.

Nvidia, which controls about 80% of the high-end AI chip market, reported fourth-quarter revenue jump of more than threefold from a year ago to $22.10 billion.

Some analysts, however, worried that U.S. curbs on chips sales to China may be hurting its revenue growth. Sales in China amounted to about 9% of Nvidia’s fourth-quarter sales, down from 22% in the prior quarter.

Rapid increases in analysts’ financial estimates mean Nvidia’s forward earnings valuation has fallen, even after its stock more than tripled last year. Ahead of Nvidia’s report, it was valued at about 30 times expected earnings, down from 49 times a year before, according to LSEG data.

Still, many investors worry about the rapid pace of Nvidia’s gains.

“We’ve gotten well ahead of expectations and baked in a lot for the next three years,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest.

At least 17 brokerages raised their price targets after results. Among the most bullish, Rosenblatt Securities raised its price target to $1,400 from $1,100, implying a $3.5 trillion stock market value.

UBS cut its price target to $800 from $850, reflecting “some potential slowing in revenue growth.”

Short sellers betting Nvidia’s stock would fall rushed to close those trades on Thursday, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

Short sellers had lost over $2 billion on paper, taking their declines to more than $6.8 billion so far this year, Dusaniwsky said.

(Reporting by Noel Randewich in Oakland, California, and Medha Singh and Amruta Khandekar in BengaluruEditing by Arun Koyyur and Matthew Lewis)

By Ted Hesson

WASHINGTON (Reuters) – Talking to Latino voters in Nevada about President Joe Biden, immigration activist Rico Ocampo says one issue keeps coming up: they are disappointed at what they see as his failure to expand protections for immigrants in the U.S. illegally.

Ocampo, who works for the pro-immigrant group Make the Road Nevada, cites the example of a young Latina voter he met whose parents lacked legal immigration status. Unsure about voting for Biden, she gave the impression she might not vote at all, Ocampo said.

The encounter illustrates the challenges for Biden in Nevada – and nationally – as he tries to simultaneously appeal to the Democrat voter base in favor of immigration policies that protect asylum seekers while also courting others who want to reduce the number of illegal crossings from Mexico.

Biden took office in 2021 promising to reverse the hardline immigration policies of former Republican President Donald Trump, but has since toughened his own approach.

Under pressure from Republicans who accuse him of failing to control the border, Biden called on Congress last year to provide more enforcement funding and said he would “shut down the border” if given new authority to turn back migrants.

While that may placate moderates, it could dampen enthusiasm among more liberal Democrat voters and some Latinos.

“His tougher policies are making it extremely difficult for people on the ground that are getting out the vote,” Ocampo said.

Ocampo says he reminds voters that Trump, Biden’s likely rival in the Nov. 5 election, has promised mass deportations if reelected. By contrast, Biden supports deportation relief programs, including the Deferred Action for Childhood Arrivals (DACA) program, which Ocampo himself uses to work legally.

Trump and other Republicans support stricter border controls – a top concern for their base – and have criticized Biden’s policies as overly permissive.

The issue is a crucial one in the battleground state of Nevada where nearly a third of the state’s 3.2 million residents are Hispanic and one in five are foreign-born, according to U.S. Census figures. Biden narrowly bested Trump in Nevada in 2020 with the help of Latino voters, but polls currently show Trump with an edge in the state.

Latinos are not a unified voting bloc and Republicans have made inroads with Hispanics in Nevada and elsewhere in the past decade. But a report by the liberal data analysis firm Catalist found Latino support for Democrats in Nevada remained steady from 2020 to 2022 at 60%.

Record numbers of migrants have been caught trying to illegally cross the U.S.-Mexico border since Biden took office in 2021, an issue Republicans have sought to wield to their advantage ahead of the election. A Reuters/Ipsos poll in January found rising concern about immigration, particularly among Republicans, as Biden’s approval rating sank to 38%.

While Biden and Trump were tied among voting-age Americans, Biden held a 10 percentage point advantage over Trump among Hispanics.

‘YOU HAVE TO LEAN IN’

Anat Shenker-Osorio, a California-based political messaging consultant who has worked on Democratic campaigns, said Biden’s tougher border stance is not likely to win over voters who want more enforcement.

“Regardless of what Democrats promise within this framework, they’re always going to be seen as less tough,” she said.

Biden campaign sources argue their voter base will ultimately choose Biden over Trump when it comes to immigration – and that other issues such as the economy and abortion will take precedence.

A victory this month by New York Democrat Tom Suozzi in a special election to replace ousted Republican lawmaker George Santos in the U.S. House of Representatives outlined the strategy the Biden campaign thinks can help propel the president to victory, one person familiar with campaign planning told Reuters.

Republicans attacked Suozzi as soft on immigration enforcement, but Suozzi countered by highlighting his support for additional restrictions and selling himself as more solution-oriented than his Republican challenger. Suozzi also distanced himself from fellow Democrats, acknowledging that some voters thought the party needed to be tougher on the border.

“We’re feeling really good about it,” the Biden campaign source said. “If you’re going to win this argument on immigration, just like Tom Suozzi, you have to lean in.”

At the same time, the Biden campaign has painted Trump as an extremist who favors divisive policies like mass deportations and who refused to rule out revisiting his controversial migrant family separation policy.

Despite running for office in 2020 pledging to reverse many of Trump’s hardline measures, Biden’s increasingly tough stance has included adopting some Trump-like policies including raising the bar to claim asylum at the southern border.

The White House may even take additional actions to reduce illegal immigration in the coming year, two U.S. officials and a third source familiar with the matter said, requesting anonymity to discuss internal deliberations.

One option it is considering is using executive authority to deny more migrants asylum at the border, the source familiar with the matter said. The move would use a legal statute that served as the basis for Trump’s travel ban policies that blocked travelers from some Muslim-majority nations and other countries, the person said.

The Biden administration is particularly interested in lowering the number of Venezuelans and families arriving at the border, the sources said, since both groups have crossed in large numbers and can be challenging to deport.

The Biden administration also has explored a “last in, first out” policy to prioritize resolving cases of recent border crossers, one of the officials said.

White House spokesperson Angelo Fernandez Hernandez declined to say whether any particular executive actions are under discussion and blamed Republicans for blocking a Biden-backed, bipartisan border security deal brokered in the Democrat-controlled U.S. Senate.

The Republican speaker of the U.S. House of Representatives, Mike Johnson, has said his party would reject the deal and that it would not sufficiently reduce crossings.

Back in Nevada, the Las Vegas-based Culinary Workers Union Local 226 says its majority immigrant membership wants more pro-immigrant actions from Biden but will stand with the Democrat over Trump regardless.

Trump’s pledge to end birthright citizenship for children of immigrants in the country illegally and ramp up deportations are deeply worrying for the union’s members, said Ted Pappageorge, the union’s secretary-treasurer.

“I think there’s going to be a real pushback on all this flaming rhetoric,” he said.

(Reporting by Ted Hesson in Washington; Additional reporting by Nandita Bose in Washington; Editing by Mary Milliken and Deepa Babington)

By Hari Kishan, Indradip Ghosh and Sarupya Ganguly

BENGALURU (Reuters) – The recent rally in global stocks has only a little further to go given last year’s unexpectedly sharp run-up, according to a Reuters poll of equity strategists who were evenly split on whether there will be a correction in the next three months.

Starting in late 2023, the rally has pushed many indices close to lifetime highs and in some cases to new records on now-extinguished expectations that the U.S. Federal Reserve would start cutting rates as early as next month.

Although rate cut bets have been tempered, indexes have continued to gain on strong earnings and booming tech stocks, even as bonds have retreated.

The poll of around 150 equity analysts taken Feb. 9-22 showed all 15 major stock bourses surveyed were expected to rise this year, but only three were expected to gain more than 10%.

By comparison, only two failed to rack up double-digit percentage gains in 2023.

“We believe investors should be open-minded that there is a scenario in which rates need to stay higher for longer, and the Fed may need to tighten financial conditions,” said global markets strategists at JPMorgan in a recent note.

Still, they added that the more than 20% rally in U.S. stocks since October “did not correct at all” despite the shift in rate expectations, saying that volatility was unusually low.

“Investor positioning has increased significantly over the past few months, which may present an increasing headwind for the market,” they noted.

While higher-for-longer interest rates could cap gains, strong corporate earnings are likely to cushion stocks from any major falls despite high valuations.

A more than 85% majority of analysts, 71 of 83, who answered a separate question said corporate earnings would increase over the next six months.

When asked if there will be a correction in the next three months, analysts were almost evenly split, with 45 of 88 across 12 markets saying unlikely and the remaining 43 saying likely.

US, INDIA MARKETS TEND TO OUTPERFORM FORECASTS

Of the 15 bourses, U.S. and India indices have most frequently outperformed analyst expectations since at least 2010.

Backed by a strong economy, India’s benchmark BSE index is forecast to add 8% this year, extending 2023’s near 19% surge but the S&P 500 is seen gaining only 2.4%, a fraction of last year’s 24% rally.

“The Indian economy remains a ‘star performing’ economy against other emerging markets,” said Neeraj Chadawar, head of quantitative equity research at Axis Securities.

“Moreover, we firmly believe it will likely continue its growth momentum in 2024 and remain the land of stability against the backdrop of a volatile global economy.”

Japan’s Nikkei index, which has risen nearly 50% since end-2022 to hit a record high on Thursday, was forecast to hold on to its gains to trade around 39,000 by year-end.

The pan-European STOXX 600 advanced to an all-time high on Thursday boosted by technology stocks and is expected to gain around another 3% by year-end.

“We think Europe will see sluggish growth and a mild contraction in activity in the U.S. will affect earnings – even though we don’t see an earnings recession, we think market expectations are high,” said Amundi strategists.

Britain’s FTSE, also forecast to rise about 3.0% from current levels to touch 7,900 by the end of the year, is the only index in the poll that analysts downgraded their outlook for. In a November poll it was seen touching 8,000.

(Other stories from the Reuters Q1 global stock markets poll package:)

(Reporting by Hari Kishan; Additional reporting and polling by correspondents in Bengaluru, Buenos Aires, London, Mexico City, Milan, New York, San Francisco, Sao Paulo, Tokyo and Toronto; Editing by Ross Finley, Kirsten Donovan)

By David French

(Reuters) -The S&P 500 and Dow Jones Industrial Average both surged to record closing highs on Thursday, powered by investors piling into growth and technology stocks the day after artificial intelligence poster child Nvidia’s bumper earnings and outlook.

For the S&P 500 benchmark, it was also the largest daily gain in 13 months. The Nasdaq Composite notched its biggest single-session advance in a year and just missed a record finish.

Investors eagerly bought stocks as Nvidia shares jumped 16.4% after the chip designer forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips and beat expectations for fourth-quarter revenue.

The company’s earnings were a major test for the AI-fueled rally on Wall Street that first pushed the S&P 500 above the 5,000 point mark earlier this month. Some analysts had cautioned that disappointing results could spark a steep selloff among technology stocks.

Instead, the S&P 500 ended at a record high, gaining 105.23 points, or 2.11%, to 5,087.03, as did the Dow Jones Industrials, which closed at 39,069.11 after rising 456.87 points, or 1.18%. It was the first time the Dow has ever finished above 39,000 points.

The Nasdaq Composite added 460.75 points, or 2.96%, to 16,041.62.

“As Nvidia goes, so goes the world,” joked Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions.

He noted how Nvidia’s earnings performance trounced high market expectations, showing doubters that plenty of juice was left in the AI trade after the recent rally.

“When do you sell – maybe you don’t. Maybe there’s still room, and I’m happy to sit and ride it out,” Janasiewicz added.

Nvidia added $277 billion to its market capitalization, beating Meta Platform’s $196 billion surge earlier this month as the biggest one-day gain by any company in Wall Street history.

Those shorting Nvidia stock were left nursing more than $2.9 billion of paper losses, per data from Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

The benchmark index will finish this year above the 5,000 mark, according to strategists in a Reuters poll.

All but one of the 11 major S&P 500 sectors rose, with technology stocks leading gains with a 4.4% increase. The outlier was utilities, which slipped 0.8%

The S&P 500 growth index advanced 3.3%, its biggest daily percentage gain since November 2022.

Shares of other companies, seen as beneficiaries of the AI boost, also got a shot in the arm. Nvidia’s rival Advanced Micro Devices, server component supplier Super Micro Computer and Arm Holdings jumped between 4.2% and 32.9%.

Synopsys soared 6.9%, to a record finish, after the software maker for chip designers reported estimate-beating earnings and outlook.

Also posting a record close was the Philadelphia Semiconductor index, with its 5% increase its largest one-day gain since October.

Big Tech and growth stocks such as Alphabet, Microsoft and Meta Platforms climbed between 1.1% and 3.9%.

Elsewhere, vaccine maker Moderna jumped 13.5% after surprising investors with a fourth-quarter profit. The stock’s technicals also pointed to a bullish outlook.

However, Rivian and Lucid tumbled 25.6% and 16.8%, respectively, after the electric vehicle startups forecast 2024 production well below analyst estimates on slowdown in demand.

The volume on U.S. exchanges was 11.93 billion shares, compared with the 11.64 billion average over the last 20 trading days.

(Reporting by Amruta Khandekar and Bansari Mayur Kamdar in Bengaluru and David French in New York; Editing by Shounak Dasgupta, Shinjini Ganguli and David Gregorio)

By Noel Randewich and Medha Singh

(Reuters) -Nvidia added $277 billion in stock market value on Thursday, Wall Street’s largest one-day gain in history after the heavyweight chipmaker’s quarterly report beat expectations and reignited a rally fueled by optimism about artificial intelligence.

The company’s stock soared 16.4% to close at $785.38, a record-high close, lifting its market capitalization to $1.96 trillion after its January-quarter report late on Wednesday showed demand for its specialized chips used in AI computing continued to outpace analysts’ already-high expectations.

The Santa Clara, California-based company’s results fed new fuel to a global rally in technology stocks linked to AI, propelling the S&P 500, Europe’s STOXX 600 and Japan’s Nikkei share average to record highs.

Traders exchanged $65 billion worth of Nvidia’s shares on Thursday, accounting for almost a fifth all trading in S&P 500 stocks.

Nvidia’s one-day increase in stock market value was the largest in Wall Street’s history, easily beating a record $196 billion gain by Meta Platforms on Feb. 2 after the Facebook parent declared its first dividend and posted robust results.

The rise in Nvidia’s market value on Thursday eclipsed the entire value of Coca-Cola, at $265 billion.

Its gain made Nvidia the U.S. stock market’s third-most valuable company, pulling ahead of Amazon.com and Alphabet after jockeying with the two tech powerhouses in recent weeks.

Microsoft and Apple, valued at $3.06 trillion and $2.85 trillion, respectively, are Wall Street’s two most valuable companies.

Nvidia’s stock has now climbed 58% in 2024, accounting for more than a quarter of the S&P 500’s increase year-to-date. That makes Nvidia’s outlook crucial not just for direct shareholders, but for owners of index funds widely held in retirement savings accounts.

“The people who made the most money in the gold rush of the mid-1800s were the ones providing the tools to get the job done, not those hunting for the precious metal,” said Russ Mould, investment director at AJ Bell.

“Nvidia is effectively playing the same role today in this tech revolution.”

Soaring demand for Nvidia’s chips used by companies rushing to upgrade their AI offerings helped the Silicon Valley firm forecast a whopping 233% growth in current-quarter revenue, above market expectations of a 208% rise.

Other chipmakers exposed to AI also rallied, with Advanced Micro Devices jumping about 11% and Broadcom adding 6.3%. The Philadelphia chip index rallied 4.97% to a record high in its biggest one-day gain since May 2023.

The S&P 500 surged 2.11% to a record high, and the Nasdaq jumped nearly 3%, leaving it just short of its first record-high close since November 2021.

Super Micro Computer, which sells AI-related server equipment, jumped over 30%, bringing its gain this year to over 240%.

Nvidia, which controls about 80% of the high-end AI chip market, reported fourth-quarter revenue jump of more than threefold from a year ago to $22.10 billion.

Some analysts, however, worried that U.S. curbs on chips sales to China may be hurting its revenue growth. Sales in China amounted to about 9% of Nvidia’s fourth-quarter sales, down from 22% in the prior quarter.

Rapid increases in analysts’ financial estimates mean Nvidia’s forward earnings valuation has fallen, even after its stock more than tripled last year. Ahead of Nvidia’s report, it was valued at about 30 times expected earnings, down from 49 times a year before, according to LSEG data.

Still, many investors worry about the rapid pace of Nvidia’s gains.

“We’ve gotten well ahead of expectations and baked in a lot for the next three years,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest.

At least 17 brokerages raised their price targets after results. Among the most bullish, Rosenblatt Securities raised its price target to $1,400 from $1,100, implying a $3.5 trillion stock market value.

UBS cut its price target to $800 from $850, reflecting “some potential slowing in revenue growth.”

Short sellers betting Nvidia’s stock would fall rushed to close those trades on Thursday, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

Short sellers had lost over $2 billion on paper, taking their declines to more than $6.8 billion so far this year, Dusaniwsky said.

(Reporting by Noel Randewich in Oakland, California, and Medha Singh and Amruta Khandekar in BengaluruEditing by Arun Koyyur and Matthew Lewis)

By David French

(Reuters) -The S&P 500 and Dow Jones Industrial Average both surged to record closing highs on Thursday, powered by investors piling into growth and technology stocks the day after artificial intelligence poster child Nvidia’s bumper earnings and outlook.

For the S&P 500 benchmark, it was also the largest daily gain in 13 months. The Nasdaq Composite notched its biggest single-session advance in a year and just missed a record finish.

Investors eagerly bought stocks as Nvidia shares jumped 16.4% after the chip designer forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips and beat expectations for fourth-quarter revenue.

The company’s earnings were a major test for the AI-fueled rally on Wall Street that first pushed the S&P 500 above the 5,000 point mark earlier this month. Some analysts had cautioned that disappointing results could spark a steep selloff among technology stocks.

Instead, the S&P 500 ended at a record high, gaining 105.23 points, or 2.11%, to 5,087.03, as did the Dow Jones Industrials, which closed at 39,069.11 after rising 456.87 points, or 1.18%. It was the first time the Dow has ever finished above 39,000 points.

The Nasdaq Composite added 460.75 points, or 2.96%, to 16,041.62.

“As Nvidia goes, so goes the world,” joked Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers Solutions.

He noted how Nvidia’s earnings performance trounced high market expectations, showing doubters that plenty of juice was left in the AI trade after the recent rally.

“When do you sell – maybe you don’t. Maybe there’s still room, and I’m happy to sit and ride it out,” Janasiewicz added.

Nvidia added $277 billion to its market capitalization, beating Meta Platform’s $196 billion surge earlier this month as the biggest one-day gain by any company in Wall Street history.

Those shorting Nvidia stock were left nursing more than $2.9 billion of paper losses, per data from Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

The benchmark index will finish this year above the 5,000 mark, according to strategists in a Reuters poll.

All but one of the 11 major S&P 500 sectors rose, with technology stocks leading gains with a 4.4% increase. The outlier was utilities, which slipped 0.8%

The S&P 500 growth index advanced 3.3%, its biggest daily percentage gain since November 2022.

Shares of other companies, seen as beneficiaries of the AI boost, also got a shot in the arm. Nvidia’s rival Advanced Micro Devices, server component supplier Super Micro Computer and Arm Holdings jumped between 4.2% and 32.9%.

Synopsys soared 6.9%, to a record finish, after the software maker for chip designers reported estimate-beating earnings and outlook.

Also posting a record close was the Philadelphia Semiconductor index, with its 5% increase its largest one-day gain since October.

Big Tech and growth stocks such as Alphabet, Microsoft and Meta Platforms climbed between 1.1% and 3.9%.

Elsewhere, vaccine maker Moderna jumped 13.5% after surprising investors with a fourth-quarter profit. The stock’s technicals also pointed to a bullish outlook.

However, Rivian and Lucid tumbled 25.6% and 16.8%, respectively, after the electric vehicle startups forecast 2024 production well below analyst estimates on slowdown in demand.

The volume on U.S. exchanges was 11.93 billion shares, compared with the 11.64 billion average over the last 20 trading days.

(Reporting by Amruta Khandekar and Bansari Mayur Kamdar in Bengaluru and David French in New York; Editing by Shounak Dasgupta, Shinjini Ganguli and David Gregorio)

By Georgina McCartney

HOUSTON (Reuters) -Oil futures settled higher on Thursday as hostilities continued in the Red Sea with Iran-aligned Houthis stepping up attacks near Yemen, but a large build in U.S. crude inventories weighed on gains.

Brent crude futures settled higher, up 64 cents or 0.77% at $83.67 a barrel. U.S. West Texas Intermediate crude futures settled higher, up 70 cents or 0.9% at $78.61 a barrel.

Israel’s Army Radio reported on Thursday that Prime Minister Benjamin Netanyahu’s war cabinet has approved sending negotiators to Gaza for truce talks taking place in Paris as pressure mounts in the Middle East.

Meanwhile, Yemen’s Iran-aligned Houthis will escalate their attacks on ships in the Red Sea and other waters and have introduced “submarine weapons,” the group’s leader said on Thursday, as it keeps up attacks on shipping to show support for Palestinians in the Gaza war.

“The Red Sea situation continues to ferment and it is starting to register more with the market that this is an issue that is not going away,” John Kilduff, a partner at New York-based Again Capital said.

“Europe is bearing the brunt in terms of supply – but European supply problems become U.S. supply problems because that will put a call on US gasoline and diesel”, he added.

On Thursday, the premium for front-month WTI crude futures to the second month was up to 75 cents per barrel. That spread has widened in recent sessions, and on Tuesday touched $1.95 per barrel ahead of the March contract’s expiry.

Market players are likely pricing in a potential disruption to supply in the near future, with the front-month contract’s premium over the second widening, which “indicates a tightening market,” UBS analyst, Giovanni Staunovo said in a note.

Still, crude gains were capped on Thursday by a build in U.S. oil inventories due to refinery maintenance and outages.

U.S. crude inventories rose by 3.5 million barrels to 442.9 million barrels in the week ending Feb. 16, the U.S. Energy Information Administration said on Thursday, compared with analysts’ expectations in a Reuters poll for a 3.9 million-barrel rise.

U.S. crude inventories have climbed amid outages at large refineries that have left utilization rates at the lowest level in two years, though the plants are soon to resume output.

Refinery utilization rates were unchanged last week, at 80.6%, according to EIA data on Thursday, compared with analysts’ expectations of an uptick to 81.5%, according to a Reuters poll.

BP’s 435,000 barrel-per-day (bpd) Whiting refinery in Indiana, the largest in the U.S. Midwest, will return to full production in March, according to people familiar with plant operations, after a power outage from Feb. 1.

TotalEnergies’ 238,000-bpd refinery in Port Arthur, Texas, is also working to complete a restart, though it is still operating minimally following a weather-related power outage.

The outages have drawn down distillate inventories, which include diesel and heating oil. Those stockpiles were down by 4 million barrels in the week to 121.7 million barrels, versus expectations for a 1.7 million-barrel drop, the EIA data showed.

(Additional reporting by Colleen Howe and Jeslyn Lerh; editing by David Evans, Kirsten Donovan, Will Dunham and Alexandra Hudson)