The tech-heavy Nasdaq index experienced a significant surge of over 1% on Thursday, driven by the soaring shares of Nvidia and a strong forecast that had a positive impact on other AI-related companies. Meanwhile, investors closely monitored the progress of US debt ceiling talks.
Nvidia Corp, recognized as the world’s most valuable listed chip company, witnessed a remarkable 26.3% increase in its shares, reaching a record high. The company’s forecast for quarterly revenue exceeded estimates by 50%, and it announced plans to ramp up its supply to meet the growing demand for its AI chips.
This positive news also benefited other heavyweight players in the AI industry. Shares of Microsoft Corp and Alphabet Inc rose by approximately 3.2% and 2.8% respectively. The Philadelphia SE Semiconductor index showed significant growth of 5.9%, reaching its highest level in over a year. If these gains hold, it will register the largest daily percentage rise in more than six months.
David Russell, the vice president of market intelligence at TradeStation, expressed his belief that AI is entering a significant investment boom and will play a vital role in solving real-world problems. The immediate applications of AI and its benefits to major companies already established in the stock market have contributed to its growing importance.
Several other chip companies also experienced positive movement. Advanced Micro Devices Inc, Micron Technology Inc, and Broadcom Inc saw their shares rise between 3.4% and 10.3%. However, Intel Corp, which has limited exposure to AI, faced a decline of 6.8%, hampering the overall gains of the S&P 500.
While the tech sector experienced a boost, Wall Street’s main indexes had faced significant drops in the previous two sessions. Investors eagerly awaited clarity on a deal to raise the US debt ceiling, as failure to do so could result in a default. Reports indicated that US President Joe Biden and Republican lawmaker Kevin McCarthy were closing in on a deal, with the parties differing by just $70 billion in discretionary spending.
The market uncertainty surrounding the debt ceiling issue was reflected in the rising two-year yields, reaching their highest level since March. Additionally, ratings agencies Fitch and DBRS Morningstar placed the United States on a credit watch for a potential downgrade.
Meanwhile, economic data showed a moderate increase in the number of Americans filing new claims for unemployment benefits, while a report from the Commerce Department confirmed a slowdown in economic growth during the first quarter.
As of 12:03 p.m. ET, the Dow Jones Industrial Average experienced a decline of 155.23 points or 0.47%, reaching 32,644.69. On the other hand, the S&P 500 showed an increase of 23.47 points or 0.57%, reaching 4,138.71, and the Nasdaq Composite surged by 191.44 points or 1.53%, reaching 12,675.60.
In other market news, Ralph Lauren Corp witnessed an 8.6% rise after exceeding profit estimates, while electronics retailer Best Buy Co Inc saw a 1.2% increase in its shares following upbeat quarterly earnings. However, discount store chain Dollar Tree Inc faced a decline of 11.3% after lowering its annual profit outlook.
The Nasdaq’s strong performance on Thursday reflects the market’s optimism surrounding Nvidia’s forecast and the broader AI industry. Nvidia’s impressive outlook, with projected revenue 50% higher than estimates, has fueled expectations of increased demand for AI-related products and services. As a result, other major AI players such as Microsoft and Alphabet also experienced notable gains, highlighting the positive sentiment across the sector.
The Philadelphia SE Semiconductor index, which includes prominent chip companies, surged by 5.9%, reaching its highest level in over a year. If these gains are sustained, it will mark the index’s most substantial daily percentage increase in more than six months. This surge underscores the importance of the semiconductor industry in driving technological advancements, particularly in the field of AI.
On the NYSE, declining issues outnumbered advancers with a ratio of 2.67-to-1, while on the Nasdaq, the ratio stood at 2.35-to-1.
