Nasdaq Bounces as Chips Lead AI Revival: Stock Market Today
Nvidia, the leader of the AI revolution, was among the top Dow Jones stocks on midterm Election Day. But the blue chip index was in the red at the closing bell.
The main equity indexes were mixed on the first Tuesday of November, though names related to the artificial intelligence trade lifted the Nasdaq Composite and the S&P 500 into the green. Crude oil was flat, but bond yields were up, as voters across the U.S. headed to polling stations for midterm elections.
By the closing bell, the tech-heavy Nasdaq Composite had risen 0.8% to 25,372, and the broad-based S&P 500 was up 0.4% at 7,568. But the blue-chip Dow Jones Industrial Average had slipped 0.4% to 51,786.
The front-month West Texas Intermediate crude oil futures contract was up 0.1% to $96.56 per barrel, amid continuing diplomatic efforts to end the war in the Middle East. Treasury yields were higher across the maturity spectrum, including the 2-year (+0.4 basis points, 4.623%), the 10-year (+6.4 bps, 4.958%) and the 30-year (+6.2 bps, 5.331%).
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Nvidia (NVDA, +2.3%) was among the top two Dow Jones stocks as investors, traders and speculators saw value amid an AI boom, as opposed to traps in an AI bust, particularly with regard to chipmakers. Indeed, the VanEck Semiconductor ETF (SMH, +2.0%) ended a three-session losing streak.
Fellow Magnificent 7 stock Microsoft (MSFT, +2.7%) set the pace for Papa Dow, while Sherwin-Williams (SHW, -3.3%) was the 30-stock index's biggest loser a day after the materials stock was its biggest winner.
Nvidia surged ahead of Apple (AAPL, -1.9%) in the global market cap leadership standings after the iPhone maker slid on concerns about slowing growth and shrinking margins in its core services business.
Earnings and opportunities
Palantir Technologies (PLTR, -1.7%) was lower, too, in the aftermath of its third-quarter earnings report, as analysts focused on slowing total commercial contract value growth for the AI-powered software stock.
Both AAPL and PLTR "are great near-term buys," according to Louis Navellier of Navellier & Associates.
Apple's free cash flow rose by $136 billion, giving it plenty to spend on AI and acquisitions, while Palantir's commercial revenue rose 148%, making it less dependent on government contracts.
Navellier also notes market anticipation for results from Advanced Micro Devices (AMD, +3.7%) and Super Micro Computer (SMCI, +3.1%), which are reporting after the closing bell.
AMD and SMCI were among multiple semiconductor stocks posting solid gains, as tech stocks led the way higher today.
Why Eaton is one of the best stocks to buy
Eaton (ETN, +7.0%), meanwhile, demonstrated why it's one of the best stocks to buy now with another expectations-beating quarter and guidance for more growth.
As Kiplinger's Anne Kates-Smith notes, demand has never been higher for the mission-critical components Eaton makes for use in data centers, as well as by utilities and other customers to manage electric power production and other complex systems.
Management of the industrial stock reported earnings growth of 20% to $3.68 per share on revenue growth of 28% to $8.9 billion. Wall Street forecast EPS of $3.54 on sales of $8.5 billion.
Eaton estimates fourth-quarter EPS of $4.10 on organic revenue growth of 13% to 15%. Analysts expect earnings of $4.09 per share and organic growth of 11%.
In a press release announcing results, CEO Pablo Ruiz (PDF) highlighted segment margins above the high end of guidance and continued momentum across Eaton's electrical businesses.
"Record orders grew sequentially, backlog continued to expand, and we remain well-positioned to help customers deliver on their critical power infrastructure investments," Ruiz said.
What the midterms mean for your stock portfolio
"Positioning your portfolio with the outcome of electoral politics in mind is a bad idea," Kiplinger's Dan Burrows writes at the very top of his article on what midterm elections mean for your portfolio.
If you plan to mess with your portfolio based on Tuesday's results, "you might want to think again." To begin with, forecasts about sectors and stocks that could outperform or underperform following elections "are too often wrong."
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At the same time, we're right at the beginning of one of the best seasonal periods for the stocks. And the S&P 500 has risen during the 12 months following midterm elections 18 straight times since 1954. So why not sit tight.
Bottom line, whether Republicans or Democrats control Congress, sticking to a long-term plan maintaining a well-diversified portfolio is all you really need to do right now.
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