4:12pm: Chipmakers rise at the expense of traditional CPU producers
The Dow closed Thursday down 35 points, 0.1%, at 32,765, the Nasdaq Composite added 214 points, 1.7%, to 12,698 and the S&P 500 climbed 36 points, 0.9%, to 4,151. The small-cap Russell 2000 index dipped 12 points, 0.7%, to 1,755.
Nvidia shares closed nearly 25% after the company posted better-than-expected quarterly results bolstered by strong demand for chips. That sparked a tech rally that drive the Nasdaq higher.
“What you’re seeing today is an extension of the existing trends being magnified even more with this news from Nvidia,” said Keith Lerner, co-chief investment officer at Truist “It’s a tale of two markets, and the winners are extending the lead and the losers are extending their losses on a relative basis.”
Meanwhile, the Dow was hurt by Intel, a conventional CPU manufacturer, shares of which declined 5.5% to $27.40.
12.05pm: NVIDIA stock soars 27% on better-than-expected financial results
US stocks were mixed in noon trading as tech stocks rallied on NVIDIA’s stellar quarterly results that were boosted by surging demand for chips used in artificial intelligence.
At midday, the Dow lost 158 points to 32,642, while the S&P 500 added 23 points at 4,138 and the tech-heavy Nasdaq climbed 191 points to 12,675.
“The macro point is that innovation in technology can outweigh the headwinds of a slowing economy, or higher interest rates,” said Certuity co-chief investment officer Dylan Kremer said.
Other notable movers included shares of Snowflake Inc, which fell 16% after the cloud software company issued weaker-than-expected 2Q and full-year guidance as growth for cloud computing partners such as Amazon.com slows.
9:40am: AI stocks surge at the open
Tech stocks shined at the open on Thursday buoyed by NVIDIA’s blowout 1Q results and strong 2Q guidance.
The Nasdaq had added 195 points or 1.6% and the S&P 500 was up 25 points or 0.6%, while the Dow Jones had fallen 117 points or 0.4% at 32,683 points.
NVIDIA shares were up 24.9% at US$381.50, sending fellow AI stocks Advanced Micro Devices, C3.ai, and Taiwan Semiconductor Manufacturing up 9.4%, 5.7%, and 9.7%, respectively.
Meanwhile, US first quarter gross domestic product (GDP) was upwardly revised to 1.3% quarter-over-quarter annualized from 1%.
“NVIDIA news and US GDP data have offset news that the Fitch Ratings agency has put the US AAA rating on negative watch, citing concerns over the debt ceiling negotiations,” commented FOREX.com market analyst Fiona Cincotta.
7:50am: Dow struggles on debt fault concerns
US stocks are expected to diverge at the open on Thursday morning, with blue chips seen lower as Fitch Ratings placed the US's triple-A rating on negative watch due to debt default fears, while tech stocks got a boost after a strong earnings beat from NVIDIA.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.4% lower, but those for the S&P 500 index gained 0.6%, and contracts for the Nasdaq 100 jumped 1.9%.
On Wednesday. the DJIA closed 255 points, or 0.8% lower at 32,799, while the S&P 500 lost 0.6%, and the Nasdaq Composite fell 0.5%, reflecting the lack of news out of US debt ceiling extension talks.
Overnight, Fitch Ratings put the US long-term foreign-currency issuer default rating on a negative watch. The rating agency said the ongoing debt ceiling negotiations have raised the risks that the US government could miss payments on some of its obligations. However, Fitch said it still expects a resolution before the X-date, assumed as June 1.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank commented: "US stocks and bonds fell on Wednesday as the US politicians still didn’t seal a deal to raise the debt ceiling and the Federal Reserve (Fed) minutes showed dissatisfaction with the speed at which inflation slows. The Fed wants to either keep rates steady or further hike the rates to continue their battle against inflation."
Ozkardeskaya added: "And now Fitch threatens to cut the US’ AAA rating as the political theatre has real-life implications for the economy, and for investors. JPM now sees the US default risk at 25% - whatever default means for them. US T-bills maturing on June 6th are now yielding above 6.5% while those maturing by the end of the month are yielding just around 3%.
"Besides the fact that the US could default on its payments, no one knows what default would look like to bondholders. Will the holders of the potentially defaulted bonds lose all, will they lose a couple of days payments, what will be the legal implications. No one wants to take the risk, or the headache until a debt ceiling deal is reached."
But countering the gloom, NVIDIA shares surged higher in extended-hours trading after the artificial intelligence beneficiary gave stronger-than-expected revenue guidance for its fiscal second quarter, while also reporting beats on the top and bottom line in the previous quarter.
Although, on the other hand, Snowflake shares tumbled after-hours as the cloud computing company gave weaker-than-expected product revenue guidance for the fiscal second quarter.