U.S. stocks closed significantly higher on Thursday, as optimism about artificial intelligence (AI) drove notable gains in Nvidia and other chipmakers. The S&P 500 approached record levels.
Shares of Taiwan Semiconductor Manufacturing (TSMC), listed in the U.S., surged nearly 10% after the world’s largest contract semiconductor manufacturer projected over 20% revenue growth in 2024, fueled by the strong demand for high-end chips used in AI applications.
Nvidia, a major chipmaker, climbed 1.9% to reach a new record high, ranking as the most actively traded company on Wall Street, with shares worth nearly $28 billion exchanged. Competitor Advanced Micro Devices (AMD) also rose 1.6%, reaching a new record high.
Other chipmakers such as Broadcom, Qualcomm, and Marvell Technology experienced gains of more than 3% each. The Philadelphia SE semiconductor index rallied 3.4%, approaching its record high from December 2023.
The surge in the semiconductor industry is attributed to the impact of AI, leading to a strong and ongoing market rally, according to Jake Dollarhide, CEO of Longbow Asset Management.
Apple saw a 3.3% increase after BofA Global Research upgraded the tech giant’s stock from “neutral” to “buy”. This contributed to the S&P 500 information technology index rising by 2% and reaching a new record high.
The S&P 500 rose by 0.88%, closing at 4,780.94 points, just 0.3% below its record-high close in January 2022. The Nasdaq increased by 1.35%, reaching 15,055.65 points, while the Dow Jones Industrial Average went up by 0.54% to 37,468.61 points.
Recent data indicated a decrease in the number of Americans filing new claims for unemployment benefits, hitting a late-2022 low, suggesting robust job growth in January.
Market sentiment has been fluctuating as investors have become less certain about the Federal Reserve initiating interest rate cuts in March. The S&P 500 experienced losses on Tuesday and Wednesday following strong December retail sales data and policymakers downplaying expectations for an early start to rate cuts.
Traders currently see a 56% chance of a 25-basis-point rate cut in March, compared to over 80% a month ago, according to the CME Group’s FedWatch Tool.
Interest rate-sensitive sectors showed declines, with the S&P 500 real estate index down by 0.6% and the utilities index losing 1.05%.
Atlanta Federal Reserve President Raphael Bostic expressed openness to reducing rates sooner than anticipated if there is “convincing” evidence in the coming months that inflation is falling faster than expected. Bostic had initially indicated that he expected a rate cut in the second half of 2024.
Humana dropped 8% after forecasting higher fourth-quarter medical costs, and UnitedHealth fell 1.6%. KeyCorp declined by 4.6% after reporting a drop in fourth-quarter profit, while Birkenstock sank about 8% after missing quarterly profit expectations.
Spirit Airlines ended down more than 7% after announcing it is exploring options to refinance its debt and is not considering restructuring.
Advancing issues outnumbered falling ones within the S&P 500 by a two-to-one ratio. The S&P 500 recorded 30 new highs and seven new lows, while the Nasdaq had 56 new highs and 180 new lows. Trading volume on U.S. exchanges was relatively heavy, with 11.8 billion shares traded compared to an average of 11.5 billion shares over the previous 20 sessions.
According to Reuter
By. Pham Thanh Bien
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