Ankika Biswas and Lisa Pauline Mattakal
(Reuters) – The tech-heavy Nasdaq index and the benchmark index opened higher on Thursday, led by a rally in chip stocks, after an upbeat earnings outlook from Nvidia (NASDAQ:) bolstered investor optimism about the rapid growth of artificial intelligence technology.
Shares of the AI chip leader jumped 6.9% in premarket trading, opening above $1,000 for the first time in history and adding about $165 billion to its market value if gains continue.
The semiconductor industry leader also announced a stock split after its shares surged more than 90% this year and jumped threefold in 2023, making Nvidia the third-most valuable stock in the United States.
The reaction to Nvidia’s widely expected results contrasts with muted, limited trading on Wall Street in the days leading up to the release, underscoring the company’s growing importance.
Its results also supported shares of other chip makers: Advanced Micro Devices (NASDAQ:), Micron Technology (NASDAQ:), Broadcom (NASDAQ:) and Hand Shares (NASDAQ:) are up 2.5-4.7%.
Artificial Intelligence stocks such as Super Micro Computer (NASDAQ:), C3.ai (NYSE:), Palantir Technologies (NYSE:) and SoundHound AI (NASDAQ:) also added from 1.7% to 6.2%.
“When (Nvidia) outperforms, boom, money is right back on the table, but it’s all an impulse trade,” said Mark Ostwald, chief economist and global strategist at ADM Investor Services International.
“With so much uncertainty elsewhere, investors are being cautious and just sticking with what I would call the market turnaround.” Short-term deals, short-term perspective.”
Wall Street’s major indexes closed lower Wednesday as investors digested minutes from the Federal Reserve’s latest meeting. Rate setters have indicated they still believe price pressures will ease, at least slowly, in the coming months, but doubts have arisen as to whether the current level of interest rates is high enough to warrant such an outcome.
Traders now expect the US central bank to cut interest rates by nearly 40 basis points by the end of the year.
Markets are also keeping an eye on economic data scheduled for the day, including S&P Global’s flash business activity indexes and housing construction figures.
Fresh data showed that the number of Americans filing new claims for unemployment benefits fell last week, indicating underlying strength in the labor market. Initial jobless claims fell to a seasonally adjusted 215,000 for the week ended May 18, compared with expectations of 220,000.
At 8:40 a.m. ET, they were up 81 points, or 0.2%, up 38.5 points, or 0.72%, and up 223 points, or 1.19%.
The index, also known as Wall Street’s “fear gauge,” hit its lowest level since November 2019.
Shares of cloud data analytics company Snowflake (NYSE:) rose 4.6%, boosted by better-than-estimated second-quarter product revenue and higher full-year expectations.
DuPont (NYSE:) shares rose 5.6% as the US conglomerate plans to split into three publicly traded companies.
US-listed shares of Taiwanese contract chipmaker TSMC rose 3.2% after forecasting 10% annual revenue growth in the global semiconductor industry, excluding memory chips.
Shares of Ticketmaster owner Live Nation fell 6.2% after a report that the US Department of Justice may seek to break up the company to combat its dominance in concert ticket sales.