Nasdaq ends sharply higher as Alphabet and AMD fuel AI surge
Alphabet logo and AI Artificial Intelligence words are seen in this illustration taken, May 4, 2023. REUTERS/Dado Ruvic/Illustration/File photo
The Nasdaq ended sharply higher on Thursday after Alphabet and Advanced Micro Devices sparked a megacap rally on fresh optimism about artificial intelligence.
Shares of Alphabet jumped 5.3 percent as analysts cheered the launch of the Google-parent’s newest AI model, while AMD soared nearly 10 percent after the company estimated the potential market for its data center AI chips could reach $45 billion this year.
Other heavyweight tech-related stocks also gained, with Nvidia and Meta Platforms rising over 2 percent, Amazon up 1.6 percent and Apple 1 percent higher.
The Philadelphia semiconductor index jumped 2.8 percent, increasing its 2023 gain to 48 percent, much of that fueled by bets about the future of AI.
“Today it’s an AMD-Google rally. There’s a contagion effect across the market. Everyone wants to get on the bandwagon,” said Jay Hatfield, CEO of Infrastructure Capital Management in New York.
“We’re kind of in this weird market, a tag-team market, where one day tech leads, and then the next day value and the broad market lead.”
The S&P 500 has steadily climbed since the end of October on expectations the Federal Reserve has finished its campaign of interest rate hikes and that it could begin cutting rates in March.
The S&P 500 climbed 0.80 percent to end the session at 4,585.59 points, with 1.8 stocks in the index gaining for each one that fell.
The most traded stock in the S&P 500 was Tesla, with $25.7 billion worth of shares changing hands during the session. The shares rose 1.37 percent.
The Nasdaq Composite jumped 1.37 percent to 14,339.99 points, while Dow Jones Industrial Average rose 0.18 percent to 36,117.57 points.
Volume on U.S. exchanges was relatively heavy, with 11.2 billion shares traded, compared to an average of 10.8 billion shares over the previous 20 sessions.
Traders have almost fully priced in the likelihood of the Fed keeping rates unchanged at its meeting next week.
Data on Thursday showed the number of Americans filing new claims for unemployment benefits increased less than expected last week to a seasonally adjusted 220,000 for the week.
A Labor Department jobs report due on Friday could hint at how quickly the U.S. economy is softening and may sway expectations about when the Fed is likely to begin cutting rates. Non-farm payrolls are expected to have increased by 180,000 jobs last month after rising by 150,000 in October.
Interest rate futures imply a nearly 64 percent chance of a rate cut as soon as March, according to the CME Group’s FedWatch tool.
Limiting gains in the Dow, shares of Merck fell 1.7 percent after the drugmaker’s immunotherapy combination failed in a lung cancer study.
