Wall Street barrels to records as Nvidia tops $3 trillion in total value
Wall Street barreled to records Wednesday as its frenzy around artificial intelligence technology keeps sending stocks higher. The rally sent the total market value of Nvidia, which has become the symbol of the AI boom, above $3 trillion for the first time.
The Standard & Poor’s 500 index climbed 1.2% to top its all-time high set two weeks ago. The Nasdaq composite jumped even more, 2%, and likewise set a record. The Dow Jones industrial average, which has less of an emphasis on tech, rose 0.2%.
Some fatter-than-expected profit reports from tech companies helped drive the market. Hewlett Packard Enterprise jumped 10.7% after saying strong sales related to artificial intelligence systems helped it deliver better results than expected. It also raised its financial forecasts for the year.
Companies have been meeting Wall Street’s sky-high hopes for how much money the new technology will generate. That’s helped to catapult stocks almost regardless of what the broader economy and interest rates are doing.
Nvidia is leading the way because its chips are powering much of the rush into AI, and it rose 5.2% to bring its gain for the year to more than 147%. As has become almost routine, Nvidia was again the day’s strongest force lifting the S&P 500.
The chip company also joined Microsoft and Apple as the only U.S. stocks to ever top $3 trillion in total value. Apple regained that milestone valuation after rising 0.8% on Wednesday.
Other big tech stocks also drove the market higher, including a 1.9% rise for Microsoft, 3.8% gain for Meta Platforms and 6.2% rally for Broadcom. Cybersecurity company CrowdStrike climbed 12% after delivering better profit and revenue for the latest quarter than expected.
All told, the S&P 500 rose 62.69 points to 5,354.03. The Nasdaq jumped 330.86 points to 17,187.90, and the Dow added 96.04 points to 38,807.33.
The gains for tech stocks helped offset a 4.9% drop for Dollar Tree, which matched analysts’ expectations for profit but fell just shy for revenue. The retailer also said it’s considering selling or spinning off its Family Dollar business.
The broad retail industry has been highlighting challenges for lower-income U.S. households, which are trying to keep up with still-high inflation.
Treasury yields fell in the bond market after some mixed data on the economy. One report said real estate, healthcare and other businesses in the U.S. services sector returned to growth last month and beat economists’ forecasts. Perhaps more importantly for Wall Street, the report from the Institute for Supply Management also said prices rose at a slower pace in May than a month before.
Another report Wednesday suggested hiring slowed last month by more than expected at U.S. employers outside the government.
Stocks had been shaky recently after reports suggested the U.S. economy’s growth is fading under the weight of high interest rates. Wall Street has actually been hoping for such a slowdown because it can drive down inflation and convince the Federal Reserve to deliver much-desired cuts to interest rates.
But it also raises the possibility of overshooting and sending the economy into a recession, which would ultimately hurt stock prices.
Treasury yields sank after the weaker-than-expected economic reports raised expectations for coming cuts to rates by the Fed. They eased more Wednesday. The yield on the 10-year Treasury fell to 4.28% from 4.33% late Tuesday and from 4.60% a week ago.
The next big move for Treasury yields and Wall Street overall could come Friday, when the U.S. government releases its monthly jobs report. That report is much more comprehensive than Wednesday’s from ADP, and economists expect Friday’s data to show a slight pickup in overall hiring. The hope continues to be that the job market slows its growth but not by so much that it devolves into widespread layoffs.
The worst-case scenario for markets probably would be if data on the jobs market and the rest of the economy come in stronger than expected, according to JJ Kinahan, chief executive of IG North America. That could push the Fed to consider hiking its main interest even further, which would put more strain on the economy and investment prices. The federal funds rate has been sitting at its highest level in more than two decades.
But Kinahan said he sees this scenario as less likely than others.
In stock markets abroad, indexes rose across much of Europe ahead of a decision on interest rates Thursday by the European Central Bank. Investors expect it to cut rates amid worries about the continent’s economy.
Stocks fell across much of Asia, with indexes dropping 0.9% in Tokyo and 0.8% in Shanghai, but they rose 1% in Seoul.
Choe writes for the Associated Press
