Nasdaq Leads Market Rally as Nvidia Breaks Out and Software Stocks Surge

Dow Jones futures were little changed overnight, alongside S&P 500 futures and Nasdaq-100 futures, as investors digested a flurry of earnings reports from major technology companies and looked ahead to a key speech by Federal Reserve Chairman Kevin Warsh at the Jackson Hole monetary symposium on Friday morning.

The stock market rallied solidly on Thursday, with the Nasdaq composite leading the charge with a 1.6% gain. The S&P 500 rose 0.7%, while the Dow Jones Industrial Average advanced 0.2%. The small-cap Russell 2000 climbed 0.3%, reflecting a more muted performance among smaller companies. The session was clearly dominated by Nvidia and software stocks, which together drove much of the index's gains.

Nvidia (NVDA) jumped 8.7% to 227.98, breaking out above a cup-with-handle buy point of 227.92 after previously clearing early entry levels. The AI chipmaker's earnings-driven rally was a standout, though it had limited coattails for the broader semiconductor and AI hardware space. Many chip stocks slashed initial gains or reversed lower, often around key technical levels, suggesting that the rally was narrowly concentrated.

Meanwhile, software stocks delivered powerful, broad-based gains, thanks to a trio of earnings beaters. CrowdStrike (CRWD), Salesforce.com (CRM), and Okta (OKTA) each gapped up more than 20% following their quarterly results, igniting a sector-wide rally. Other software names, including ServiceNow (NOW), Palantir Technologies (PLTR), JFrog (FROG), Dynatrace (DT), Fortinet (FTNT), Twilio (TWLO), and Microsoft (MSFT), all flashed buy signals, triggering early entries or breakouts. All of these names have now cleared earnings-related uncertainty, making them attractive to investors looking for momentum plays.

In the ETF space, the iShares Expanded Tech-Software Sector ETF (IGV) surged 7.7%, reflecting the sector's strong performance. The VanEck Vectors Semiconductor ETF (SMH) leaped 3.1%, largely fueled by its top holding, Nvidia. The SPDR S&P Metals & Mining ETF (XME) popped 2.2%, while the Energy Select SPDR ETF (XLE) fell 1.4%, and the Health Care Select Sector SPDR Fund (XLV) lost 1.1%, highlighting the rotation into technology and away from defensive sectors.

Thursday's after-hours earnings session was particularly active. AI chipmaker Marvell Technology (MRVL) reported results, along with software makers Rubrik (RBRK), SentinelOne (S), Workday (WDAY), Elastic (ESTC), and Autodesk (ADSK). Buy now, pay later specialist Affirm (AFRM) and bitcoin miner-turned-data center play IREN (IREN) also released their numbers.

Elastic stock surged overnight, signaling a gap above a handle buy point on a base going back to last November. Affirm jumped, indicating at least an early entry and potentially a breakout from a flat base. Workday wavered after hours, while Rubrik tumbled in extended trade after surging to a new high during the regular session. SentinelOne and Autodesk fell solidly late, reversing course from their earlier gains. Marvell retreated solidly overnight, signaling a potential test of its 50-day moving average, while IREN declined sharply, already below key support levels.

Separately, PayPal (PYPL) dived overnight after reports emerged that the Advent-Stripe consortium had dropped its pursuit of the digital payments giant, extinguishing hopes of a near-term acquisition premium.

Investors are now turning their attention to Federal Reserve Chairman Kevin Warsh, who will deliver his first speech at the Jackson Hole monetary symposium on Friday at 10 a.m. ET. Markets will be parsing his remarks for any hints about whether the Fed will raise rates in September, given persistent inflation concerns and a still-resilient labour market. The 10-year Treasury yield edged up one basis point to 4.67%, reversing slightly higher alongside oil prices, which rose 1.6% to $83.53 a barrel.

Outside of Nvidia and the software sector, market breadth was mediocre. The Invesco S&P 500 Equal Weight ETF (RSP) declined 0.3%, though it remains close to record levels. This suggests that while the headline indexes performed well, the rally was not uniformly distributed across all stocks and sectors.

For investors, the key takeaway is to remain disciplined and avoid overconcentration in any single sector or theme. The market could be starting to regain momentum, and overnight earnings reactions, combined with Fed Chair Warsh's remarks, could either kick that momentum into higher gear on Friday or apply the brakes. As always, prudent risk management and diversification remain essential in navigating the current market environment.