Wall Street closed higher as Nvidia sparked a rally in AI stocks

May 25 (Reuters) – Wall Street closed sharply higher on Thursday after expectations of an outburst from Nvidia sent the chipmaker’s stock higher and sent artificial intelligence-related companies on a rally, while investors watched for signs of progress in U.S. debt ceiling talks.

Nvidia Corp. (NVDA.O) rose 24% to a record close after the world’s most valuable chipmaker forecast quarterly revenue 50% higher than estimates and said it was ramping up supply to meet demand for its own artificial intelligence (AI) chips. with it.

Investors exchanged nearly $60 billion in Nvidia stock, accounting for a fifth of all trades in S&P 500 shares during the session, according to Refintiv data.

“Nvidia has officially replaced FANG as the cornerstone of this market,” said Jake Dollarhyde, CEO of Longbow Asset Management in Tulsa, Oklahoma. “Investors are obsessed with AI, and NVIDIA is the perfect AI story.”

Heavyweights Microsoft Corp (MSFT.O) and Alphabet Inc (GOOGL.O) rose 3.9% and 2.1%, respectively. Advanced Micro Devices Inc (AMD.O) jumped about 11%, Micron Technology Inc (MU.O) stock rose 4.6%, and Broadcom Inc (AVGO.O) rose more than 7%.

The Philadelphia Semiconductor Index (.SOX) rose 6.8% to its highest level in more than a year in the biggest daily percentage rise since November.

Intel Corp (INTC.O), which investors see as lagging behind in the artificial intelligence race, fell 5.5%, weighing on the Dow Jones Industrial Average.

Wall Street has been nervous in recent days about dragging through negotiations in Washington to raise the country’s $31.4 trillion debt ceiling and avoid default.

Reuters reported, quoting a source familiar with the talks, that US President Joe Biden and Republican Representative Kevin McCarthy came close on Thursday to reaching an agreement, as the estimated spending does not exceed $70 billion for the two parties.

Reflecting the uncertainty in the market, two-year yields hit their highest levels since March after ratings agencies Fitch and DBRS Morningstar put the US on credit watch for a possible downgrade.

Meanwhile, data showed that the number of Americans filing new applications for unemployment benefits rose moderately last week, while a report from the Commerce Department confirmed that economic growth slowed in the first quarter.

The S&P 500 rose 0.88%, ending the session at 4,151.28 points.

The Nasdaq index rose 1.71% to 12,698.09 points, while the Dow Jones Industrial Average fell 0.11%, to 32,764.65 points.

Trading volume on US stock exchanges was relatively heavy, with 10.8 billion shares traded, compared to an average of 10.5 billion shares during the previous 20 sessions.

The S&P 500 is now up about 8% so far in 2023 and the Nasdaq has recovered more than 30% of its losses last year.

Ralph Lauren Corp (RL.N) rose 5.3% after the luxury retailer beat earnings estimates.

Electronics retail sales Best Buy Co Inc (BBY.N) rose 3.1% following its upbeat quarterly earnings, while discount store chain Dollar Tree Inc (DLTR.O) slumped after lowering its annual profit forecast.

Declines outnumber gainers in the S&P 500 (.AD.SPX) by a ratio of 1.4 to one.

S&P 500 records 11 new highs and 31 new lows; The Nasdaq index posted 56 new highs and 163 new lows.

Additional reporting by Shriyashi Sanyal and Shristi Achar in Bengaluru; Editing: Arun Koyor, Vinay Dwivedi and David Gregorio

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