By Amruta Khandekar and Bansari Mayur Kamdar
(Reuters) -The benchmark S&P 500 index hit a fresh record high on Thursday after a blowout revenue forecast from AI darling Nvidia boosted investor confidence in the sector and sparked a rally in growth and technology stocks.
Nvidia’s shares surged 15.2% after the chip designer forecast a roughly three-fold surge in first-quarter revenue on strong demand for its AI chips and beat expectations for fourth-quarter revenue.
This pushed the benchmark S&P 500 up 1.71% at 11:34 a.m. ET, to an all-time high of 5,066.81 points.
Nvidia’s earnings were a major test for the AI-fueled rally on Wall Street that first pushed the S&P 500 above the 5,000 point mark earlier this month. Some analysts had cautioned that disappointing results could spark a steep selloff among technology stocks.
“The whole package of Nvidia’s reporting lends a bedrock of credibility for other AI and technology companies as it clearly appears that Nvidia and AI are here to stay,” said Andre Bakhos, president at Ingenium Analytics.
The Dow Jones industrials also hit a record high of 38,994.50 points earlier in the day and was last up 280.22 points, or 0.73%, at 38,892.46. The Nasdaq Composite was up 380.60 points, or 2.44%, at 15,961.47.
Nvidia was set to add over $250 billion to its market capitalization if gains held, beating Meta Platform’s $196 billion surge earlier this month in the biggest one-day gain by any company in Wall Street history.
The benchmark index will finish this year above the 5,000 mark, according to strategists in a Reuters poll.
Nine of the 11 major S&P 500 sectors rose, with technology stocks leading gains with a 3.8% jump.
The S&P 500 growth index rose 2.8%, headed for its biggest one-day percentage gain since November 2022.
Shares of other companies, seen as beneficiaries of the AI boost, also got a shot in the arm. Nvidia’s rival Advanced Micro Devices, server component supplier Super Micro Computer and Arm Holdings jumped between 7.6% and 26%.
The Philadelphia Semiconductor index hit a record high, jumping 4.7%.
Big Tech and growth stocks such as Alphabet, Microsoft and Meta Platforms rose between 1.8% and 4%.
Meanwhile, investors’ bets are tilted towards June as the starting point for the first rate cut from the Federal Reserve.
Fed Vice Chair Philip Jefferson said on Thursday he would be looking at the totality of incoming economic data in assessing the time for the U.S. central bank to begin cutting its benchmark policy rate.
Data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting a tight labor market.
Rivian and Lucid fell 27.0% and 19.5%, respectively, after the electric vehicle startups forecast 2024 production well below analyst estimates on slowdown in demand.
Advancing issues outnumbered decliners by a 1.88-to-1 ratio on the NYSE and by a 1.21-to-1 ratio on the Nasdaq.
The S&P index recorded 66 new 52-week highs and one new lows, while the Nasdaq recorded 84 new highs and 90 new lows.
(Reporting by Amruta Khandekar and Bansari Mayur Kamdar in Bengaluru; Editing by Shounak Dasgupta and Shinjini Ganguli)
