NEW YORK: The Nasdaq and the S&P 500 jumped around 2% on Wednesday, as investors hoped for hints from the Federal Reserve on the timing of rate cuts, a bullish forecast from AMD boosted chip stocks and Microsoft slipped after a higher spending forecast.
Both the S&P 500 and the Nasdaq hit one-week highs and were on track to log their biggest one-day gains since February.
Advanced Micro Devices climbed 5% after lifting its 2024 forecast for AI-chip sales, helping Nvidia jump 12%.
The Philadelphia SE Semiconductor index rose 5%, set for its biggest one-day gain since May 2023, but on track for its worst month since October 2023 after the recent chip stocks rout.
“In many cases, chip stocks are overvalued at this point. There may be some room for them to run here, but then again they’re not going to be able to maintain that pace,” said Paul Nolte, senior wealth adviser and market strategist for Murphy & Sylvest.
Investors also parsed a Reuters report on the Biden administration’s plans to expand US powers to stop exports of semiconductor manufacturing equipment to Chinese chipmakers.
Microsoft lost 1.3% on plans to spend more this fiscal year to build its AI infrastructure - another sign that the payoff from hefty investments in the technology could take longer than hoped.
Among megacaps, Meta jumped 2% ahead of its results, due after markets close. Apple and Amazon.com, which will report earnings on Thursday, gained 1.7% and 3%, respectively.
The S&P 500 Technology index jumped 3%, leading broad-based sectoral gains.
At 12:03 p.m., the Dow rose 240.67 points, or 0.59%, to 40,984.00, the S&P 500 gained 88.78 points, or 1.63%, to 5,525.22 and the Nasdaq Composite gained 425.90 points, or 2.48%, to 17,573.31.
Wall Street’s fear gauge dipped to a one-week low, signaling improved investor sentiment.
Tech and chip stocks took a hit this month after prompting a record-breaking Wall Street run in 2024, on enthusiasm surrounding AI adoption and the prospect of early interest-rate cuts.
Results from Alphabet, Tesla and Microsoft failed to thrill. Investors are questioning if the AI-driven rally has run its course and are rotating to underperforming sectors.