Nvidia has surpassed Apple in market capitalization, reaching an impressive $3 trillion. US markets are also performing strongly, with the S&P 500 and Nasdaq Composite hitting new record highs, driven by optimism around potential rate cuts from the Federal Reserve.
Foxconn, the Taiwan-based manufacturer of iPhones, has raised its outlook for the second quarter amid robust demand. In China, the Shanghai and Shenzhen stock exchanges are considering withholding certain market data from quant funds.
Additionally, US private equity firm Blackstone is expanding into the UK housing market.
Marching Ahead:
Nvidia surged past Apple in market capitalization overnight, becoming the second-most valuable public company in the US, just behind Microsoft. Nvidia reached a milestone $3 trillion market cap after its shares rose over 5 percent overnight. Already the world's most valuable chipmaker, Nvidia's shares have been on an impressive rise, climbing over 24 percent since reporting strong first-quarter earnings in May. This growth is driven by its leading position in AI chips for data centers.
Sitting on Top:
The S&P 500 and Nasdaq Composite, the two major US stock benchmarks, hit new record highs overnight thanks to a rally in technology stocks. This surge was driven by hopes that the Federal Reserve might start cutting interest rates soon, following softening job market data.
The May private payrolls report showed signs of a weakening labor market, raising expectations for Fed rate cuts this year. Another report indicated a drop in job openings to the lowest level in over three years, further boosting this sentiment. Traders now see a nearly 69 percent chance of a rate cut in September, up from around 50 percent the previous week, according to the CME's FedWatch tool.
Better Days Ahead:
Taiwan-based Foxconn, Apple’s main iPhone assembler, reported a 22.1 percent year-on-year increase in its May revenue, setting a new record for the month. The company initially expected growth for the second quarter both sequentially and year-over-year, but now predicts even better performance due to unexpectedly high demand for AI servers. However, Foxconn did not provide specific details about this increased demand.
Hiding Secrets:
The Shanghai and Shenzhen stock exchanges are considering stopping certain value-added market data feeds to institutions like computer-driven quant funds, according to Reuters. This move is part of Chinese regulators' efforts to tighten control over a sector blamed for increasing market volatility. The exchanges might stop providing detailed transaction information, including tick-by-tick data, the report suggested.
Changing Streams:
US private equity giant Blackstone is planning to buy 1,750 new homes from British housebuilder Vistry. This move comes as more institutional investors are turning to rental properties, seeing them as a safe bet due to a perceived shortage. While markets for offices and retail spaces face challenges, rental homes have shown to be more resilient.
Vistry announced the deal on Tuesday, stating that Blackstone Real Estate, along with a minority investment partner Regis, will acquire the homes with a development value of £580 million ($740 million). This is Blackstone’s second purchase from Vistry in just eight months, following their acquisition of over 2,800 mixed-tenure homes last November.
The Big Gets Bigger:
The Dubai Mall, the world’s largest shopping complex, is getting even bigger. Developer Emaar Properties announced a new expansion worth around 1.5 billion dirhams ($408 million).
Covering 12 million square feet and connected to the iconic Burj Khalifa, the world’s tallest skyscraper, the mall is a top destination. The latest expansion will introduce 240 new luxury retail outlets and dining establishments, enhancing the mall’s appeal even further.
Eyes on ECB:
The European Central Bank is widely expected to start cutting interest rates for the euro area in its upcoming monetary policy meeting later today. This will be the first rate cut by the ECB since September 2019.
While there’s a lot of optimism, investors are also watching closely due to slightly higher-than-expected eurozone inflation, which might delay the ECB’s rate cuts.
Nvidia's Rise to AI Prominence:
Nvidia, the chipmaker, is soaring high due to the surging demand for its semiconductors, which are vital for AI applications. In the latest quarter, Nvidia's revenue skyrocketed, more than tripling compared to the same period last year. Wall Street predicts Nvidia to rake in $117 billion in revenue for fiscal 2025, almost doubling its revenue for 2024 and more than quadrupling its revenue from the previous year.
Nvidia's estimated net margin is at 53%, much higher than Apple's 26.3% and Microsoft's 36.4%. Despite Apple and Microsoft having higher overall revenues, Nvidia's profitability highlights its strong position in the AI market.
Wall Street's Reaction to Nvidia's Milestone:
Wall Street celebrated Nvidia's achievement as it crossed the $3 trillion market capitalization mark. Stocks closed higher on Wednesday, with the S&P 500 and Nasdaq reaching new highs. The S&P 500 surged 1.2% to 5,354.03, while the Nasdaq Composite Index rallied 2.0% to 17,187.90. The Dow Jones Industrial Average rose 0.3% to 38,807.33.
Patrick O'Hare of Briefing.com remarked, "You have kind of the best of both worlds for the stock market in that you have lower interest rates and strength in the mega-cap stocks, specifically, Nvidia." Other major names like Meta Platforms also saw gains, advancing 3.8%, while Hewlett Packard Enterprise bounced 10.7%. Apple shares rose 0.8%.
Economic data revealed private sector hiring cooled more than expected in May, potentially giving the Federal Reserve confidence to cut interest rates sooner. All eyes are on the government's jobs report due Friday for further insights into the economy's direction and potential rate adjustments.
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