Today, stocks are rallying to fresh record highs. This isn’t just your average “good day” on Wall Street. In fact, this could mark the Street’s apex of 2024 so far.

While the S&P 500 is up 0.7%, it’s not the largest daily gain of the year. So, why the claim that today is the best day for stocks?

It’s because stocks are surging despite Nvidia, the crucial player, taking a tumble.

Navigating Nvidia’s Strong Earnings and Investor Sentiment

Last night, AI chipmaker Nvidia released robust quarterly earnings. Revenues saw a 122% surge, especially data center revenues that soared over 150%. Profits leaped nearly 170%. During the earnings call, management expressed optimism about the escalating demand for AI chips in data centers, the increasing use of AI in enterprises to enhance productivity, and remarkable advancements in self-driving technology by auto companies, largely due to AI innovations.

This healthy earnings report underscored the enduring power of the AI Boom.

However, despite the positive earnings, Nvidia’s stock is dropping today as some investors had higher expectations. Ordinarily, a post-earnings decline in NVDA would drag down the whole market, given its significant influence this year. But that’s not the case today.

While NVDA stock is down, the overall markets are experiencing a notable uptick.

This divergence is noteworthy and bullish.

An overly reliant market can pose risks. Robust markets thrive on broad participation, not just by a select few.

Until now in 2024, the market has experienced a narrow leadership. AI stocks, spearheaded by NVDA, have been soaring, leaving the rest of the market behind. But a shift is beginning.

Between January and June, the Global X Artificial Intelligence ETF (AIQ) surged around 15%, while the small-cap Russell 2000 remained almost stagnant. However, since early July, AIQ has dropped by approximately 2%, while the Russell 2000 has climbed by nearly 10%.

This shift signals broader participation in the market, with promising bullish implications.

The Bottom Line

Anticipate a widening market rally in the coming months as the Fed reduces interest rates, the economy strengthens, and the AI Boom persists with enthusiasm. This expansion sets the stage for sustained market growth throughout 2025 and possibly into 2026.

Today’s events emphasize that the narrow market rally is primed for a significant expansion, benefitting all stocks rather than just a few.

Therefore, while NVDA stock isn’t the highlight right now, several others stand poised for substantial upside potential in the months ahead.

Discover some of the stocks we’re currently endorsing.

On the date of publication, the author did not hold any positions in the securities mentioned in this article.

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