Nasdaq Pulls Back Sharply As Nvidia Slumps But Dow Inches Higher

(RTTNews) - After moving sharply higher over the two previous sessions, stocks gave back some ground during trading on Thursday. The tech-heavy Nasdaq showed a significant move to the downside, although the Dow managed to end the day slightly higher.

The Nasdaq climbed well off its early lows but still slumped 273.69 points or 1.2 percent to 22,878.38. The S&P 500 also fell 37.27 points or 0.5 percent to 6,908.86, but the narrower Dow inched up 17.05 points or less than a tenth of a percent to 49,499.20.

The pullback on Wall Street came amid a negative reaction to earnings news from Nvidia (NVDA), with the artificial intelligence chipmaker tumbling by 5.5 percent.

Shares of Nvidia pulled back off their best closing level in over three months even though the company reported better than expected fiscal fourth quarter results and provided upbeat guidance.

"It says a lot when a stock market darling beating revenue forecasts by billions of dollars can no longer muster a positive share price reaction," said Dan Coatsworth, head of markets at AJ Bell. "The mood music is changing on Nvidia, and it represents a significant shift in investor sentiment."

He added, "The focus has now shifted to growing competition, concerns about excessive levels of investment across the AI space either being unsustainable or unnecessary, and whether the party will end in tears."

Nvidia helped to lead the semiconductor sector lower, as reflected by the 3.2 percent plunge by the Philadelphia Semiconductor Index. The index ended the previous session at a record closing high.

Networking stocks also showed a notable move to the downside, contributing to the slump by the tech-heavy Nasdaq.

Outside the tech sector, gold stocks surged despite a decrease by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 2.9 percent to a record closing high

Airline stocks also saw significant strength on the day, resulting in a 2.3 percent jump by the NYSE Arca Airline Index.

The uptick by the Dow partly reflected a sharp increase by shares of Salesforce (CRM), with the customer service software maker spiking by 4.0 percent after reporting better than expected fourth quarter results.

On the U.S. economic front, a report released by the Labor Department showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended February 21st.

The Labor Department said initial jobless claims rose to 212,000, an increase of 4,000 from the previous week's revised level of 208,000.

Economists had expected jobless claims to climb to 215,000 from the 206,000 originally reported for the previous week.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Thursday. Hong Kong's Hang Seng Index slumped by 1.4 percent, while Japan's Nikkei 225 Index rose by 0.3 percent and South Korea's Kospi spiked by 3.7 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the French CAC 40 Index advanced by 0.7 percent, the German DAX Index climbed by 0.5 percent and the U.K.'s FTSE 100 Index increased by 0.4 percent.

In the bond market, treasuries moved higher, more than offsetting the weakness seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.1 basis points to a nearly three-month closing low of 4.017 percent.

Looking Ahead

Trading on Friday may be impacted by reaction to the Labor Department's report on producer price inflation in the month of January.