NEW YORK (AP) — Wall Street barreled to records Wednesday as its frenzy around artificial-intelligence technology keeps sending stocks higher. The rally sent the total market value of Nvidia, which has become the poster child of the AI boom, above USD3 trillion for the first time.
The S&P 500 climbed 1.2 per cent to top its all-time high set two weeks ago. The Nasdaq composite jumped even more, 2 per cent, and likewise set a record. The Dow Jones Industrial Average, which has less of an emphasis on tech, lagged the market with a gain of 96 points, or 0.2 per cent.
Some fatter-than-expected profit reports from tech companies helped drive the market. Hewlett Packard Enterprise jumped 10.7 per cent after saying strong sales related to artificial-intelligence systems helped it deliver better results than expected. It also raised its financial forecasts for the year.
Companies have so far been meeting Wall Street’s sky-high hopes for how much money AI technology will generate. That’s helped to catapult stocks almost regardless of what the broader economy and interest rates are doing.
Nvidia is leading the way because its chips are powering much of the rush into AI, and it rose another 5.2 per cent to bring its gain for the year to more than 147 per cent. As has become almost routine, Nvidia was again the day’s strongest force lifting the S&P 500.
The chip company also joined Microsoft and Apple as the only US stocks to ever top USD3 trillion in total value. Apple regained that milestone valuation after rising 0.8 per cent Wednesday.
Other big tech stocks also drove the market higher, including a 1.9 per cent rise for Microsoft, 3.8 per cent gain for Meta Platforms and 6.2 per cent rally for Broadcom. Cybersecurity company CrowdStrike climbed 12 per cent after delivering better profit and revenue for the latest quarter than expected.
All told, the S&P 500 rose 62.69 points to 5,354.03. The Nasdaq jumped 330.86 to 17,187.90, and the Dow added 96.04 to 38,807.33.
The gains for tech stocks helped offset a 4.9 per cent drop for Dollar Tree, which matched analysts’ expectations for profit but fell just shy of revenue. The retailer also said it’s considering selling or spinning off its Family Dollar business.
The broad retail industry has been highlighting challenges for lower-income US households, which are trying to keep up with still-high inflation.
Treasury yields fell in the bond market following some mixed data on the economy. One report said real estate, health care and other businesses in the US services sector returned to growth last month and beat economists’ forecasts. Perhaps more importantly for Wall Street, the report from the Institute for Supply Management also said prices rose at a slower pace in May than a month before.
Another report in the morning suggested hiring slowed last month by more than expected at US employers outside the government.
Stocks had been shaky recently after reports suggested the US economy’s growth is fading under the weight of high interest rates. Wall Street has actually been hoping for such a slowdown because it can drive down inflation and convince the Federal Reserve to deliver much-desired cuts to interest rates.
But it also raises the possibility of overshooting and sending the economy into a recession, which would ultimately hurt stock prices.
Treasury yields sank after the weaker-than-expected economic reports raised expectations for coming cuts to rates by the Federal Reserve. They eased more on Wednesday. The yield on the 10-year Treasury fell to 4.28 per cent from 4.33 per cent late Tuesday and from 4.60 per cent a week ago.
The next big move for Treasury yields and Wall Street overall could come Friday, when the US government releases its monthly jobs report. That report is much more comprehensive than Wednesday’s from ADP, and economists expect Friday’s data to show a slight pickup in overall hiring. The hope continues to be that the job market slows its growth but not by so much that it devolves into widespread layoffs.
The worst-case scenario for markets would likely be if data on the jobs market and the rest of the economy come in stronger than expected, according to JJ Kinahan, CEO of IG North America.
That could push the Federal Reserve to consider hiking its main interest even further, which would put more strain on the economy and investment prices. The federal funds rate has been sitting at its highest level in more than two decades.
But Kinahan says he sees this scenario as less likely than others.
In stock markets abroad, indexes rose across much of Europe ahead of a decision on interest rates Thursday by the European Central Bank. Investors expect it to cut rates amid worries about the continent’s economy.
Stocks fell across much of Asia, with indexes dropping 0.9 per cent in Tokyo and 0.8 per cent in Shanghai, but they rose 1 per cent in Seoul.
