Nasdaq, S&P 500 pop as Nvidia galvanizes stocks

The S&P 500 and Nasdaq Composite rose to fresh records in early trading on Thursday after Nvidia’s (NVDA) blockbuster earnings lit a fire under optimism that the AI rally has more room to run.

The tech-heavy Nasdaq Composite (^IXIC) gained 0.8%, while the S&P 500 (^GSPC) rose 0.6% before paring gains. The Dow Jones Industrial Average (^DJI), which includes fewer tech stocks, dipped 0.3%.

Nvidia shares popped more than 8% to top $1,000 for the first time after the AI bellwether blew past Wall Street’s sky-high forecasts for first quarter earnings. The chip giant also raised its guidance, easing fears that AI demand might be losing steam.

Other chipmakers and AI-related stocks rode higher on the coattails of the results, with server makers Dell (DELL) and Super Micro Computer (SCMI) up about 6% and 5%, respectively.

The Nvidia euphoria helped the market set aside the interest rate hike concerns that fed the previous day’s losses. Stocks had slipped after Federal Reserve minutes revealed some policymakers are open to keeping rates higher for longer this year if inflation doesn’t cool as projected.

Read more: How does the labor market affect inflation?

The S&P Global purchasing managers index (PMI) for May came in at 54.4 versus 51.3 last month. The flash reading, which came in higher than what economists had expected, showed business activity accelerated at the fastest pace in two years, despite the Fed’s efforts to quell price pressures.

Elsewhere, AI hopes gave corporates a boost. Cloud-based analytics company Snowflake’s (SNOW) shares added 4% on the heels of an upbeat sales outlook. Meanwhile, News Corp. (NWS) got a bump up after the media giant signed a deal with Microsoft-backed OpenAI that should give ChatGPT access to content from The Wall Street Journal and other titles.

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Thu, May 23, 2024 at 10:03 AM CDT

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