U.S. stocks rose on Thursday, as AI optimism drove Nvidia and other chip stocks higher, while doubts about interest rate cuts limited gains.
U.S.-listed shares of Taiwan Semiconductor Manufacturing (TSMC) jumped 8% after the world’s largest contract semiconductor maker projected 2024 revenue growth of more than 20% on booming demand for high-end chips used in artificial-intelligence applications.
Heavyweight chipmaker Nvidia was up 1.4% after hitting an intraday record high, and it was the most traded company on Wall Street, with about $21 billion worth of shares exchanged as of midafternoon.
Broadcom (NASDAQ: AVGO), Qualcomm (NASDAQ: QCOM) and Marvell Technology each rose over 3%. Advanced Micro Devices (NASDAQ: AMD) notched a record high before giving up some gains to trade up 0.6%.
The Philadelphia SE semiconductor index rose 2.6%, inching closer to its December 2023 record high.
Meta Platforms climbed 1.4%, while Apple (NASDAQ: AAPL) jumped 3.1% after BofA Global Research upgraded the iPhone maker’s stock to “buy” from “neutral.”
The S&P 500 information technology index jumped as much as 2% to a record high. It was last up 1.6%.
Data showed the number of Americans filing new claims for unemployment benefits fell last week to a late-2022 low, suggesting solid job growth in January.
Jake Dollarhide, CEO of Longbow Asset Management, said he has recently been more conservative with his client’s money as investors become less sure the Federal Reserve will begin cutting interest rates in March.
The S&P 500 lost ground on Tuesday and Wednesday following strong December retail sales data and after policymakers talked down expectations for an early start to rate cuts.
“People are starting to say, ‘Hey, we’ve made the assumption the Fed is going to start cutting in March, but will they, and what does it look like if they don’t?'” Dollarhide said.
Traders now see a 56% chance for a 25-basis-point rate cut in March, compared with a chance above 80% a month ago, according to the CME Group’s (NASDAQ: CME) FedWatch Tool.
Interest rate-sensitive sectors dipped, with the S&P 500 real estate index and utilities index down 1% and 1.3%, respectively.
Atlanta Federal Reserve President Raphael Bostic said he was open to reducing rates sooner than he had anticipated if there is “convincing” evidence in coming months that inflation is falling faster than he expected. Bostic had previously said he expected it would be appropriate to cut rates in the second half of 2024.
The S&P 500 healthcare index declined 0.5%, to an over two-week low, dragged down by a 10% drop in Humana (NYSE: HUM) after the health insurer forecast fourth-quarter medical costs to be higher than previously expected.
Peer UnitedHealth (NYSE: UNH) lost 2.5%, weighing on the blue-chip Dow.
The S&P 500 was up 0.45% at 4,760.60 points.
The Nasdaq gained 0.90% to 14,989.47 points, while the Dow Jones Industrial Average was up 0.11% at 37,309.34 points.
KeyCorp (NYSE: KEY) shed almost 6% after the lender posted a drop in fourth-quarter profit, while Birkenstock (NYSE: BIRK) sank almost 9% after missing quarterly profit expectations.
Spirit Airlines tumbled 24% after Citigroup downgraded the stock to “sell” from “neutral.”
Advancing issues outnumbered falling ones within the S&P 500 by a 1.1-to-one ratio.
The S&P 500 posted 23 new highs and 7 new lows; the Nasdaq recorded 51 new highs and 154 new lows.
