23 August (Reuters) The major Wall Street indexes increased on Wednesday as Nvidia stock surged on expectations of another positive forecast from the chip maker, which would rekindle an artificial intelligence-driven rally in megacap growth firms.
On Tuesday, increasing wagers that Nvidia’s sales target will exceed Wall Street projections sent the chip designer’s shares to a record high. Analysts worry about a bigger selloff, though, if the company doesn’t meet investors’ expectations.
Nvidia’s stock increased by 2.1%. After the markets have closed on Wednesday, the corporation is anticipated to release its quarterly results.
One of the primary drivers of the S&P 500’s 15% increase so far this year has been the company’s blown-out projection from the previous quarter.
According to Matt Stucky, senior portfolio manager of Equities at Northwestern Mutual Wealth Management Company, “a lot of investors have the expectation that you don’t give that kind of guidance and commentary unless you’re pretty sure that you’re going to absolutely blow away the number on the following quarter.”
Shares of some other significant growth companies recovered from dips in the first few weeks of August, when positive economic indicators had sparked concerns that the Federal Reserve would maintain higher interest rates for longer. After data revealed that signups in the United States remained high, Netflix increased 5.4%, while Alphabet and Meta Platforms gained 2.8% and 3.1%, respectively.
The S&P 500 Communication Services Index rose 2.3% as a result of the changes.
After dismal business activity data from the United States and the euro zone suggested that there may be global disinflation, stocks gained a further boost as the yield on the 10-year U.S. Treasury note dropped from levels that were nearly 16 years high.
The data was released before comments made by U.S. Federal Reserve Chair Jerome Powell on Friday, which will be analysed for more hints about the direction of interest rates by the central bank.
According to the FedWatch tool from CME Group, traders’ odds of the Fed pausing its rate hikes next month were 88.5%.
According to strategists surveyed by Reuters, gains in U.S. stocks will be minimal from here until the end of the year. The S&P 500 is expected to complete the year at 4,496, or roughly 2.2% higher than Monday’s close.
At 11:38 a.m. ET, the Nasdaq Composite was up 199.25 points, or 1.48%, at 13,705.12, the S&P 500 was up 38.58 points, or 0.88%, and the Dow Jones Industrial Average was up 133.05 points, or 0.39%, at 34,421.88.
Following Foot Locker’s disappointing earnings prediction, whose shares plunged 32.9%, sportswear retailers Nike and Under Armour both had declines of 3.8% and 1.7%, respectively.
Following Swiss rival Roche’s accidental publication of favourable lung cancer treatment trial data, shares of pharmaceutical companies Gilead Sciences and Merck & Co. rose 1.2% and 4.2%, respectively.
Shares of Peloton Interactive fell 22.5% to a record low after the manufacturer of exercise equipment revised its cash-flow positive target.
On the NYSE and the Nasdaq, advancing issues exceeded declining ones by a ratio of 3.28 to 1 and 2.31 to 1, respectively.
The Nasdaq posted 35 new highs and 115 new lows, compared to the S&P index’s 7 new 52-week highs and 10 new lows.