The S&P 500 and Nasdaq Composite rose to new records in early trading Thursday after Nvidia’s ( NVDA ) blockbuster earnings stoked a fire under optimism that the artificial intelligence (AI) rally has more room to continue.
The Nasdaq Composite (^IXIC) rose 0.8%, while the S&P 500 (^GSPC) rose 0.6% before paring gains. The Dow Jones Industrial Average (^DJI), which includes fewer technology stocks, fell 0.3%.
Nvidia shares rose more than 8% to exceed $1,000 for the first time after the leading artificial intelligence company beat Wall Street’s high expectations for first-quarter earnings. The chip giant also raised its guidance, alleviating concerns that demand for artificial intelligence may be losing steam.
Other chipmakers and AI-related stocks rose on the back of the results, with server makers Dell (DELL) and Super Micro Computer (SCMI) rising about 6% and 5%, respectively.
Nvidia’s euphoria helped the market put aside concerns about rate hikes that fueled the previous day’s losses. Stocks fell after minutes from the Federal Reserve meeting revealed that some policymakers are open to keeping interest rates high for longer this year if inflation does not cool as expected.
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The global S&P Purchasing Managers’ Index (PMI) for May came in at 54.4 compared to 51.3 last month. The flash reading, which was higher than economists had expected, showed business activity accelerating at the fastest pace in two years, despite the Federal Reserve’s efforts to calm price pressures.
Elsewhere, hopes for artificial intelligence have given companies a boost. Shares of cloud analytics company Snowflake ( SNOW ) added 4% on the heels of upbeat sales expectations. Meanwhile, News Corp. (NWS) is on the rise after the media giant signed a deal with Microsoft-backed OpenAI that will give ChatGPT access to content from The Wall Street Journal and other titles.
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