Wall St rises on AI optimism after Micron’s upbeat forecast

NEW YORK: Wall Street’s main indexes rose in choppy trading on Thursday, with the S&P 500 hitting an intraday...
27 Sep, 2024

NEW YORK: Wall Street’s main indexes rose in choppy trading on Thursday, with the S&P 500 hitting an intraday record high after Micron’s upbeat forecast rekindled the hype around artificial intelligence, and a soft jobless claims report soothed worries about the labor market.

Micron Technology jumped 12.9% after the memory chip maker forecast higher-than-expected first-quarter revenue, underscoring that demand for memory chips used in AI computing was robust.

Most chip stocks traded up, sending the broader Philadelphia SE Semiconductor index 2% higher.

Investors also scrutinized a Labor Department report that showed jobless claims dropped to a four-month low last week, while the final reading of gross domestic product confirmed that the economy grew 3% in the second quarter.

“If there’s a problem in the labor market, it’s not showing up in the weekly jobless claims data. Numbers like this will likely keep soft-landing hopes alive and well,” said Chris Larkin, managing director of trading and investing at E*TRADE.

At 11:46 a.m. the Dow Jones Industrial Average rose 231.95 points, or 0.55%, to 42,143.85, the S&P 500 gained 19.59 points, or 0.34%, to 5,741.85 and the Nasdaq Composite gained 84.67 points, or 0.47%, to 18,166.88.

Seven of the 11 S&P 500 sectors rose, led by a 1.9% gain in materials stocks.

Metal prices got a boost after China pledged to deploy “necessary fiscal spending”. Copper miners such as Freeport-McMoRan rose 7.7%, while lithium miners such as Albemarle climbed 7% and Arcadium added 5.6%.

However, energy stocks slipped 1.7%, tracking crude prices that slid on expectations of greater supply by the OPEC.

The Russell 2000 index tracking small caps outperformed the broader market with a 0.8% gain.

The benchmark S&P 500 and blue-chip Dow have hit multiple record highs this year and the tech-laden Nasdaq is about 2% away from its own milestone. Optimism around AI and expectations of lower interest rates have led markets to rally this year.

Late on Wednesday, Fed Governor Adriana Kugler said she “strongly supported” the central bank’s decision to kick off monetary policy easing last week.

Investors have been swaying between a 25 and a 50 bps cut since the Fed commenced its easing cycle, with bets favouring a bigger cut now, up from 38.8% a week ago, as per the CME Group’s FedWatch Tool.

“The employment situation report next week is going to help really settle the debate about whether the November Fed meeting will be a 25 or 50 basis point cut,” said Brian Jacobson, chief economist at Annex Wealth Management.

Among others, US-listed Chinese firms such as Li Auto gained 7.1%, PDD Holdings advanced 11.7%, while Alibaba added 9.5%.

Wells Fargo gained 4.5% after a report showed the banking giant had sent the Fed a review for lifting asset cap restrictions.

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