All three major U.S. stock indexes posted record closing highs again on Tuesday as Nvidia shares gained following news it will build artificial intelligence supercomputers for the U.S. energy department, and as investors were optimistic about corporate earnings ahead of key results from megacaps this week.
Market Snapshot
The Dow Jones Industrial Average rose 161.78 points, or 0.34%, to 47,706.37, the S&P 500 rose 15.73 points, or 0.23%, to 6,890.89 and the Nasdaq Composite rose 190.04 points, or 0.80%, to 23,827.49.
Market Movers
Nvidia was on the verge of becoming the first company worth $5 trillion on Tuesday after the heavyweight chipmaker said it had $500 billion in bookings for its artificial intelligence processors and that it will build seven new supercomputers for the U.S. Department of Energy. Nvidia's stock closed almost 5% higher, adding over $230 billion in market value, bringing its total value to $4.89 trillion after briefly touching $4.94 trillion.
Microsoft rose 2% to $542.07 after OpenAI's for-profit arm finalized its conversion into a public-benefit corporation that will see the software giant take a 27% stake in the maker of ChatGPT. The stake will be valued at about $135 billion. Microsoft also closed with a market cap greater than $4 trillion for the first time on record.
U.S.-listed shares of Nokia spiked 23% to $7.77 after Nvidia said it would invest $1 billion in a deal to boost the Finnish company's ability to build connectivity technology for artificial intelligence. Nokia will issue Nvidia more than 166 million shares at $6.01 apiece, giving Nvidia a 2.9% ownership stake in the company.
United Parcel Service jumped 8% after the shipping and logistics company reported better-than-expected earnings. UPS announced third-quarter earnings of $1.74 a share on sales of $21.4 billion. Wall Street was expecting earnings of $1.32 on ales of $20.9 billion.
PayPal Holdings gained 3.9%. The Venmo owner beat Wall Street expectations for third-quarter adjusted earnings and revenue and raised its full-year earnings guidance. Separately, PayPal unveiled a partnership with OpenAI that will allow users to check out through ChatGPT using PayPal.
UnitedHealth, the healthcare giant, posted better-than-expected third-quarter earnings and hiked its full-year guidance. UnitedHealth's medical-loss ratio, or the share of premium revenue spent on medical claims and quality improvement, came in at 89.9%, below analysts' calls for 90.7%. The stock rose 0.5%.
SoFi Technologies rose 5.5%. The fintech posted better-than-expected earnings for its third quarter and raised its full-year outlook for the second time this year. SoFi now expects $3.54 billion in adjusted net revenue, up from previous guidance of $3.375 billion, and adjusted earnings of 37 cents a share, above prior guidance of 31 cents. Analysts were looking for $3.46 billion and 32 cents, respectively.
Qorvo shares jumped 5.7% to $97.42 after the company said it had agreed to merge with Apple supplier Skyworks Solutions in a cash-and-stock deal valuing the combined company at $22 billion. Skyworks stock traded up 5.8%.
Royal Caribbean Group tumbled 8.5%, even after the cruise line beat earnings expectations and boosted its full-year guidance. Analysts were looking for a higher full-year earnings outlook. Royal Caribbean said it now expects earnings in the range of $15.58 and $15.63 a share, but this came in below analysts' calls for $15.70.
D.R. Horton declined 3.2%. The home builder reported earnings of $3.04 a share for the fiscal fourth quarter, below the $3.27 analysts had anticipated, according to FactSet. However, the company posted 20,078 orders, ahead of Wall Street's call for 19,783.
Uranium supplier Cameco and Brookfield Asset Management announced a partnership with the Department of Commerce that will see the government arrange financing and facilitate approvals for at least $80 billion in nuclear reactors powered by Westinghouse Electric. Shares of Cameco, which owns 49% of Westinghouse, surged 23%.
Wayfair soared 23% after the furniture retailer posted third-quarter earnings and revenue that beat analysts' forecasts. Orders delivered to customers rose 5.4% from the year-earlier quarter, with repeat customers placing about 80% of total orders.
Amazon rose 1% after announcing it intends to cut 14,000 corporate jobs. "We expect to continue hiring in key strategic areas while also finding additional places we can remove layers, increase ownership, and realize efficiency gains," said Beth Galetti, senior vice president of People Experience and Technology at Amazon, in an internal memo announcing the job cuts.
Market News
US Consumer Confidence Slips to Six-Month Low; Worries over Job Availability Rising
U.S. consumer confidence eased to a six-month low in October amid worries about the availability of jobs in the near-term, offering more ammunition for the Federal Reserve to cut interest rates again on Wednesday.
The Conference Board survey on Tuesday also confirmed what economists describe as a K-shaped economy, with confidence declining among consumers making an annual income of less than $75,000, but consumers earning more than $200,000 a year more upbeat. Economists argue that high-income households are keeping the economy afloat through robust consumer spending.
OpenAI Gives Microsoft 27% Stake, Completes For-Profit Shift
OpenAI is giving its long-time backer Microsoft Corp. a 27% ownership stake as part of a restructuring plan that took nearly a year to negotiate, removing a major uncertainty for both companies and clearing the path for the ChatGPT maker to become a for-profit business.
Under the revised pact, Microsoft will get a stake in OpenAI worth about $135 billion, the companies said in a statement Tuesday. In addition, Microsoft will have access to the artificial intelligence startup’s technology until 2032, including models that achieved the benchmark of artificial general intelligence (AGI), a more powerful form of AI that most say does not exist yet.
