(Updates to mid-afternoon trading)
Indexes up: Dow 0.58%, S&P 500 0.78%, Nasdaq 1.24%
Axon surges after Q4 results beat
Lowe’s dips on weak revenue forecasts, dragging housing stocks down
GoDaddy tumbles after guiding annual revenue below estimates
Nvidia due to post earnings after the bell
By Stephen Culp and Shashwat Chauhan
NEW YORK, Feb 25 (Reuters) – Wall Street extended its tech-led rally on Wednesday ahead of Nvidia’s quarterly results, touching two-week highs as worries over artificial intelligence disruption and costs took a back seat to renewed optimism over the nascent technology’s potential benefits.
All three major U.S. stock indexes rose, with the Nasdaq, powered by chips, enjoying the largest percentage gain as markets near the end of a tumultuous month, marked by concerns over massive investment in AI infrastructure and the extent to which it could disrupt myriad industries.
“What we’re seeing today and over the course of the last month and a half is a bit of ‘buy on the dip’ mentality,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “You go through a selloff of these high-flying tech stocks, and at some point, investors determine ‘enough.’”
“While some of those concerns that drove the stocks down are probably legitimate and will materialize, the timing of their impact is very unpredictable and the severity is likely exaggerated,” Pursche added. Richmond Fed President Tom Barkin chimed in on the issue, saying it is not clear that the AI rollout will displace workers, adding the technology could enable workers and help the job market become more efficient.
The Philadelphia SE Semiconductor index was up 1.8% ahead of Nvidia’s earnings, expected after the closing bell.
Nvidia, at the forefront of the AI revolution, is expected to post year-on-year earnings growth of 72.2% on revenue of $66.2 billion, according to analyst estimates compiled by LSEG, as the chipmaker continues to benefit from the rush to invest in AI-related infrastructure. The company’s shares were up 2.2% in anticipation of its quarterly report. Nvidia options imply a move of about 5.6% in either direction on Thursday, following the company’s results.
The S&P Software & Services index, bouncing back from its 23% year-to-date slump, was a clear outperformer, jumping 2.8%.
The Dow Jones Industrial Average rose 284.51 points, or 0.58%, to 49,459.01, the S&P 500 gained 53.94 points, or 0.78%, to 6,944.01 and the Nasdaq Composite gained 283.51 points, or 1.24%, to 23,147.19.
Among the 11 major sectors in the S&P 500, tech stocks led the percentage gainers, while real estate stocks suffered the steepest loss. Axon Enterprise jumped 18.1% after the Taser-maker beat fourth-quarter profit estimates. Both First Solar and Lowe’s Companies provided weaker-than-expected annual sales guidance, sending their shares down 14.4% and 4.5%, respectively.
After Lowe’s disappointing report, housing and homebuilders were clear underperformers, down 3.1% and 4% respectively, despite the 30-year fixed mortgage contract rate dipping to a 3-1/2-year low last week, according to the Mortgage Bankers Association. On the staples side, the weakest stocks were alcohol producers with Brown-Forman off 9% and Molson Coors down 5.2%, after London-listed Johnnie Walker and Guinness maker Diageo projected a 2% to 3% organic sales decline in 2026 and cut its interim dividend in half. GoDaddy tumbled 15.5% after the internet services provider forecast annual revenue below Wall Street expectations.
Considering recent volatility in software stocks, results from Salesforce, Intuit and Snowflake will likely be subject to added scrutiny.
Advancing issues outnumbered decliners by a 1.56-to-1 ratio on the NYSE. There were 489 new highs and 87 new lows on the NYSE.
On the Nasdaq, 3,075 stocks rose and 1,576 fell as advancing issues outnumbered decliners by a 1.95-to-1 ratio.
The S&P 500 posted 46 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 114 new highs and 90 new lows.
(Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan and Ragini Mathur in Bengaluru; Editing by Rod Nickel)
