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Business News/ Markets / Stock Markets/  Nvidia-led surge in chip stocks lifts Wall Street out of Fed blues
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Nvidia-led surge in chip stocks lifts Wall Street out of Fed blues

Strong sales forecast from Nvidia boosted chip stocks and some improvement in Wall Street amid worries about consecutive Fed rate hikes in the coming months

Wall Street showed some gains due to strong sales forecast from Nvidia. (AP)Premium
Wall Street showed some gains due to strong sales forecast from Nvidia. (AP)

.S. stock indexes climbed on Thursday as a strong sales forecast from Nvidia boosted chipmakers and outweighed worries that the Federal Reserve will keep raising interest rates for longer after data highlighted a tight labor market.

Nvidia Corp surged 14.3% to a more than 10-month high after the chip designer forecast quarterly sales above estimates and reported a surge in the use of its chips to power artificial intelligence services such as chatbots.

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Other chipmakers such as Broadcom Inc, Qualcomm Inc , Intel Corp and Advanced Micro Devices Inc rose between 0.3% and 3.8%. The Philadelphia SE Semiconductor index jumped 2.7%.

However, further gains were capped by data that showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, continuing to signal persistently tight labor market conditions.

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"Markets are tracking the earnings reports overnight from Nvidia," said Robert Pavlik, senior portfolio manager at Dakota Wealth.

"Investors aren't drawing too much attention to the economic data we've had and you've got a little bit of a pop in a very popular stock like Nvidia."

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A separate report confirmed the economy grew solidly in the fourth quarter, though much of the increase in output came from piling inventory at businesses.

Gross domestic product increased 2.7% at an annualized rate last quarter, the government said in its second estimate of fourth-quarter GDP. Economists were forecasting a 2.9% rise.

At 10:10 a.m. ET, the Dow Jones Industrial Average was up 140.33 points, or 0.42%, at 33,185.42, the S&P 500 was up 23.46 points, or 0.59%, at 4,014.51, and the Nasdaq Composite was up 64.38 points, or 0.56%, at 11,571.45.

Nine of the 11 major S&P 500 sectors gained. But communication services slid 0.7%, hurt by a 4.6% drop in Netflix Inc on reports that the entertainment services firm was cutting subscription prices in 30 countries.

The S&P 500 closed lower for a fourth session on Wednesday as minutes from the Fed's meeting showed nearly all policymakers backed rate hikes but agreed the shift to smaller-sized hikes would let them calibrate better with incoming data.

After a strong January, stock markets have hit a volatile patch this month as signs of a resilient economy and hawkish commentary by central bank officials fanned concerns of more rate hikes.

Those concerns will be on top of traders' minds as they assess remarks from Atlanta Fed President Raphael Bostic and San Francisco Fed President Mary Daly during the session.

Analysts polled by Reuters predict a correction within the next three months even though they expect the S&P 500 to climb 5% by year-end.

Among other stocks, eBay Inc slid 5.7% after warning of dour demand in the first half of 2023 due to strained consumer spending in the United States and Europe.

Moderna Inc fell 7% after the vaccine maker reaffirmed its annual sales forecast of $5 billion for its COVID-19 vaccines despite its fourth-quarter sales exceeding estimates.

Advancing issues outnumbered decliners by a 3.44-to-1 ratio on the NYSE and 1.79-to-1 ratio on the Nasdaq.

The S&P index recorded seven new 52-week highs and two new lows, while the Nasdaq recorded 27 new highs and 45 new lows. (Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru; Editing by Savio D'Souza, Anil D'Silva and Arun Koyyur)

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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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Updated: 23 Feb 2023, 10:35 PM IST
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