Today, stocks are rallying to fresh record highs. Though, that’s not necessarily news; it’s been happening all year long. But I’d argue that today is much more than just your average “good day” on Wall Street. In fact, this could be the Street’s best day of 2024. Â
Now, that’s not because stocks are posting their biggest gains to-date; they aren’t. The S&P 500 is up 0.7%, which – while good – isn’t even August’s biggest daily gain.Â
Why, then, do we believe today is the best day for stocks so far this year?
Because they are soaring – even as Nvidia (NVDA), the market’s most important stock, is falling.Â
Titanic Nvidia Delivers Great Earnings, But Investors Aren’t Satisfied
Last night, AI chipmaker Nvidia reported strong quarterly earnings. Revenues rose 122%, with data center revenues climbing more than 150%. Profits jumped almost 170%. In the company conference call, management sounded very bullish about burgeoning demand for AI chips in data centers, enterprises adopting AI to drive productivity gains, even auto companies making huge breakthroughs in self-driving due to AI advancements.
It was a very healthy earnings report that also confirmed the AI Boom’s underlying strength.Â
Yet in response, Nvidia’s stock is dropping today because some investors were expecting even more from the chipmaker.Â
Typically, a post-earnings drop in NVDA would drag down the rest of the market since it’s been very dependent on the tech titan this year. But that isn’t happening today.Â
NVDA stock is down. The markets are up – by quite a bit.Â
That is very important… and very bullish.Â
Of course, it’s never healthy to have a stock market that is overly reliant on certain stocks. Healthy markets are ones with broad participation – not narrow leadership.Â
So far in 2024, we’ve had a market with narrow leadership. AI stocks, led by NVDA, have been soaring all year long. The rest of the market has struggled.Â
But now that is starting to change.Â
From January to June, the Global X Artificial Intelligence ETF (AIQ) rallied about 15%, while the small-cap Russell 2000 was essentially flat. Since early July, though, the AIQ ETF has dropped about 2% while the Russell 2000 has risen almost 10%.Â
The rest of the market is starting to join the party. And that has extremely bullish implications.Â
The Final Word
We expect that as the Fed cuts interest rates, the economy restrengthens, and the AI Boom continues with vigor, the current market rally will grow wider over the next few months.Â
This broadening should lay the groundwork for sustainable market gains throughout 2025 – even likely into 2026.Â
That’s why we think today was Wall Street’s best day of 2024 so far. It confirmed to us that the narrow market rally is ready to broaden in a big way, benefitting all stocks – not just a select few.Â
That’s why we aren’t pounding the table on NVDA stock right now. But we are pounding the table on a variety of others. And we think they have far more upside potential to offer over the next few months.Â
Check out a few of the stocks we’re actively recommending right now.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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