U.S. stocks opened higher on Thursday following another blockbuster earnings report from chip maker Nvidia, but the market’s gains were fading as Nvidia and other megacap technology stocks’ premarket rally faded.
How are stocks trading
-
The S&P 500
gained 9 points, or 0.2%, to 4,444. -
The Dow Jones Industrial Average
increased by 113 points, or 0.3%, to 34,581. -
The Nasdaq Composite
increased by 5 points, or less than 0.1%, to 13,727.
On Wednesday, the Dow Jones Industrial Average rose 184 points, or 0.54%, to 34473, the S&P 500 increased 48 points, or 1.1%, to 4436, and the Nasdaq Composite gained 215 points, or 1.59%, to 13721.
What’s driving markets
Well-received earnings from AI chipmaker Nvidia
NVDA
helped boost broader markets on Thursday, even as the chipmaker’s double-digit percentage gain from afterhours trading has faded. Shares of the chipmaking giant, which has seen its valuation roughly triple in 2023, were up 2.5% just before 10 a.m. Eastern Time.
The chipmaking giant which has been perhaps the biggest beneficiary of this year’s AI boom reported a 141% surge in data-center sales and record earnings, while also delivering third-quarter revenue guidance of $15.68 billion to $16.32 billion, surpassing Wall Street’s expectations.
Ivana Delevska, founder and CIO of Spear Invest, said Nvidia’s success would likely help boost the broader technology space over time.
“Basically, semiconductors in general are considered to be early cycle. So they are leading indicators for the rest of the technology space,” Delevska said during a phone interview with MarketWatch. “There’s an entire ecosystem of companies around them, whether it’s providing cyber security, data management, data streaming.”
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, agreed: “Nvidia smashing the forecast ceiling has also lifted the mood elsewhere.”
Shares of Palantir Technologies
PLTR,
Advanced Micro Devices
AMD
and OpenAI investor Microsoft
MSFT
all traded higher after the open, although like Nvidia they were off their premarket highs.
However, other members of the so-called “Magnificent Seven” were giving up most or all of their premarket gains, with Amazon.com Inc.
AMZN,
Tesla Inc.
TSLA
and Apple Inc.
AAPL
trading in the red Thursday morning.
Shares of Google parent Alphabet Inc.
GOOGL
GOOG,
another major AI player with its Bard chatbot, were up a modest 0.4% on both its Class A and Class C shares.
A drop in Treasury yields from Wednesday was also helping to boost stocks. The benchmark 10-year U.S. Treasury yield, which earlier this week hit a near 16-year peak of 4.36%, had pulled back to 4.204% after the U.S. market opened on Thursday. Investors blamed Wednesday’s survey data showing a drop in activity in Europe and the U.S. for the decline in yields as investors sought out the perceived safety of bonds.
“The rally in U.S. stocks and the retreat of Treasury yields followed underwhelming economic reports as the market fell back into the ‘bad news is a good’ mode,” said Stephen Innes, managing partner at SPI Asset Management.
“But encouragingly for equity investors, the weaker U.S. data lends more weight to the argument for the Federal Reserve to pause its interest rate hikes,” Innes added.
Speaking of the Fed, traders are awaiting a speech from Fed Chair Jerome Powell on Friday at the Kansas City Fed’s Jackson Hole Economic Symposium. The event begins Thursday.
See: Will Powell crush stocks again during Friday’s Jackson Hole speech? Here’s one reason investors shouldn’t worry.
Investors also received another batch of U.S. economic data Thursday, including weekly jobless benefit claims numbers. Data showed the number of Americans who applied for unemployment benefits last week fell by 10,000 to a three-week low of 230,000, offering further evidence that the labor market remains rock solid.
Data on durable-goods orders for long-lasting goods rose in July for the third month in row if recent ups and downs at Boeing are set aside. Orders increased 0.5% in July if transportation, autos and planes, are excluded.
Companies in focus
-
Nvidia Corp.‘s shares
NVDA
rose after the graphics-chip maker late Wednesday reported a 141% surge in data-center sales and record results, while shares of AI-rival Advanced Micro Devices Inc.
AMD
and third-party semiconductor foundry Taiwan Semiconductor Manufacturing Co.
TSM
Also climbed. ASML Holding
ASML,
the microchip equipment maker, saw its shares rise as well. -
Boeing stock
BA
fell along with shares of Spirit AeroSystems
SPR
after disclosing an issue with fastener holes on Boeing 737 Max aircraft. -
U.S. Steel stock
X
traded lower, extending a decline from Wednesday after Esmark withdrew its offer for the company that is being pursued by Cleveland-Cliffs
CLF.