This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Back to back gains for S&P and Nasdaq
U.S. stocks mostly rose on Monday, with the S&P 500 and Nasdaq Composite climbing two days in a row. Artificial intelligence darling Nvidia closed at a record high. Asia-Pacific markets broadly advanced on Tuesday. The rally in tech stocks pushed up Japan’s Nikkei 225 by more than 2%, but Hong Kong’s Hang Seng index dropped around 1.9% on news that U.S. authorities added some firms to a list of “Chinese military companies.”
Tencent on list of ‘Chinese military companies’
Tencent Holdings’ Hong Kong-listed shares tumbled 7% on Tuesday after the company was added to a list of “Chinese military companies” by the U.S. Department of Defense. Battery maker CATL, which is part of the supply chain for Ford and Tesla, was also added to the list. Tencent said in a statement that its inclusion on the list was “clearly a mistake.”
Nippon Steel still pursuing deal
U.S. Steel and Nippon Steel announced Monday that they had initiated two lawsuits against U.S. President Joe Biden administration’s decision to block the Japanese firm’s $14.9 billion acquisition of the American steelmaker. At a press conference on Tuesday, Nippon Steel’s Chairman and CEO Eiji Hashimoto reiterated his firm’s pursuit of the deal.
Nvidia reveals new AI-ready graphics chips
At CES, or the consumer electronics show, on Monday, Nvidia announced new graphics chips for PCs that use the same Blackwell architecture behind the company’s fastest AI processors for servers and data centers. Even though Nvidia began life as a chipmaker for games, Wall Street is not as enthused about that as it is about the chipmaker’s AI business.
Foxconn shows AI is still hot
Foxconn, which trades as Hon Hai Precision Industry, said in a Sunday statement that the company’s fourth-quarter revenue, which grew 15% year over year, was the highest ever in the company’s history for that period. Foxconn’s numbers suggest that artificial intelligence is still hot, sending up stocks of Nvidia and other global semiconductor companies.
[PRO] ETFs outperforming the S&P
U.S. stocks had a banner year in 2024. Passive investors who simply bought an exchange-traded fund tracking the S&P would have received more than 20% in returns. However, a handful of actively managed funds marketed in Europe outperformed that gain, with one ETF returning 30%.
The bottom line
Semiconductor stocks jumped on Monday, lifted by buoyant news regarding the artificial intelligence sector.
Foxconn reported record fourth-quarter revenue that was partly powered by growth in its cloud and networking products, which includes AI servers like those designed by Nvidia.
The electronics manufacturer’s glowing earnings report follows Microsoft’s announcement Friday that it plans to invest $80 billion in fiscal 2025 to build data centers that can handle AI workloads.
Those reports suggest that companies are continuing to invest heavily in AI, and the peak hasn’t yet been crested.
Riding on the back of such tailwinds, Nvidia shares jumped 3.4% — their third straight day of gains — to close at a record $149.43. The company’s stock inched up further in extended trading, and is currently above the $150 level.
More broadly, the VanEck Semiconductor ETF jumped more than 3%.
Those moves helped propel major averages forward. The tech-heavy Nasdaq Composite was the clear winner, climbing 1.24%, while the S&P 500 rose 0.55%.
However, the Dow Jones Industrial Average dipped 0.06%. The index shed earlier gains accrued when it was reported that Trump might soften his tariffs on imports, which would have benefited its constituent blue-chip companies such as those in the consumer discretionary sector.
Despite those upbeat reports and positive market movements on Monday, the year ahead continues to look rocky.
“The market is, I think, being pretty optimistic about tech right now, looking for earnings growth of 20% this year versus 12.8% for the market … but valuations do appear restrictive,” CFRA Research chief investment strategist Sam Stovall said.
The true test for AI, then, is whether companies can leverage it to boost revenue, rather than just sending the price of the sector’s picks and shovels higher.
— CNBC’s Ryan Browne, Jordan Novet, Pia Singh and Tanaya Macheel contributed to this report.
