Key points:

  • Weak retail sales data eased concerns about inflation and raised hopes that the Federal Reserve will cut interest rates.
  • 80.3% of S&P 500 companies beat earnings expectations.
  • Artificial intelligence is becoming an increasingly important factor in the market.

U.S. stocks concluded the trading session with gains on Thursday, propelled by retail sales data that registered a steeper decline than anticipated. This development has heightened traders’ optimism regarding a potential initiation of interest rate cuts by the Federal Reserve in the upcoming months.

The S&P 500 increased by 29.05 points, equivalent to 0.58%, closing at 5,029.67 points. Similarly, the Nasdaq Composite recorded a gain of 47.03 points, or 0.30%, reaching 15,906.17. The Dow Jones Industrial Average exhibited an increase of 350.07 points, representing a 0.91% rise, concluding at 38,774.73.

According to a report from the Commerce Department, U.S. retail sales experienced a 0.8% decline in January, primarily attributed to reduced sales in the passenger vehicle industry. This data alleviated concerns among investors regarding the unexpectedly high inflation figures that led to a downturn in stocks on Tuesday. Additionally, a report from the Labor Department indicated that initial claims for state unemployment benefits for the week ending Feb. 10 were 212,000, surpassing the anticipated 220,000.

AI stocks are in the green

According to data from LSEG, the overall sentiment among investors improved as 80.3% of S&P 500 companies exceeded earnings expectations, surpassing the annual average of 76%. Goldman Sachs strategists highlighted a noteworthy trend, indicating that a record number of S&P 500 companies engaged in discussions about artificial intelligence during fourth-quarter conference calls. This shift underscores the growing significance of AI in both financial markets and corporate America.

Goldman analysts reported that the percentage of S&P 500 companies referencing “AI” increased to 36%, marking a rise from 31% in the third quarter. Notably, IBM’s shares reached a more than 10-year high in the previous month following a better-than-expected earnings forecast, driven by robust demand for the company’s artificial intelligence services.

Furthermore, chip maker Nvidia has reaped the benefits of the artificial intelligence fervor, with its shares climbing nearly 50% this year after experiencing over a threefold increase in 2023. This ascent propelled Nvidia to become the third-largest U.S. company by market value, surpassing both Amazon and Alphabet.