New York, USA – The S&P 500 and Nasdaq Composite reached unprecedented levels in early trading on Thursday as Nvidia’s exceptional earnings fueled optimism about the potential for continued growth in the AI sector.
The Nasdaq Composite, which has a heavy focus on technology stocks, surged by 0.8%, while the S&P 500 also saw a significant increase of 0.6% before experiencing some retracement. In contrast, the Dow Jones Industrial Average, consisting of fewer tech companies, saw a slight decrease of 0.3%.
Nvidia’s stock soared by over 8%, surpassing the $1,000 mark for the first time, after the company exceeded Wall Street’s expectations for first-quarter earnings. The semiconductor giant also provided an optimistic outlook, alleviating concerns about a potential slowdown in AI demand.
Following Nvidia’s strong performance, other chipmakers and AI-related stocks benefited from the positive sentiment. Server manufacturers Dell and Super Micro Computer experienced gains of about 6% and 5%, respectively.
The market managed to set aside worries about potential interest rate hikes that had resulted in losses the previous day. This shift in focus came after Federal Reserve minutes indicated that policymakers are considering keeping rates elevated for a longer period if inflation does not subside as predicted.
In May, the S&P Global purchasing managers index (PMI) rose to 54.4 from 51.3 the previous month, surpassing economists’ expectations. This higher-than-anticipated reading indicated a rapid acceleration in business activity over the past two years, despite efforts by the Fed to mitigate inflationary pressures.
Additionally, advances in AI technology had a positive impact on various corporations. Snowflake, a cloud-based analytics company, saw a 4% increase in its share price following a strong sales forecast. News Corp. also received a boost after entering into a partnership with Microsoft-backed OpenAI, providing ChatGPT access to content from The Wall Street Journal and other publications.
Overall, the market responded positively to Nvidia’s impressive earnings report, propelling key indices to new heights and fostering optimism about the continued growth of the AI industry.