On Thursday, the Nasdaq experienced a significant surge, primarily driven by Alphabet and Advanced Micro Devices (AMD), igniting a megacap rally amid renewed optimism about artificial intelligence (AI).
Alphabet’s (GOOGL.O) shares soared by 5.3% as industry analysts hailed the launch of the latest AI model by the Google-parent company.
Meanwhile, AMD witnessed an impressive 10% surge, fueled by its estimation that the potential market for its data center AI chips could reach a remarkable $45 billion this year.
The momentum extended to other major tech-related stocks as well, with Nvidia (NVDA.O) and Meta Platforms (META.O) both posting gains of over 2%. Amazon (AMZN.O) rose by 1.6%, while Apple (AAPL.O) climbed 1%.
The Philadelphia semiconductor index (.SOX) recorded a substantial 2.8% increase, further bolstering its 2023 gain to an impressive 48%. Much of this growth was underpinned by the market’s enthusiasm and bets on the future of AI.
Jay Hatfield, CEO of Infrastructure Capital Management in New York, noted, “Today it’s an AMD-Google rally. There’s a contagion effect across the market.
Everyone wants to get on the bandwagon.” He also highlighted the market’s recent alternating dynamics, with tech taking the lead on one day and value and the broader market leading the next.
The S&P 500 (.SPX) continued its steady ascent since late October, primarily driven by expectations that the Federal Reserve had concluded its campaign of interest rate hikes and might begin rate cuts in March.
The index surged by 0.80% to close at 4,585.59 points, with 1.8 stocks in the index gaining for every one that declined.
In terms of trading activity, Tesla emerged as the most actively traded stock in the S&P 500, with shares worth $25.7 billion changing hands during the session. Tesla’s stock rose by 1.37%.
The Nasdaq Composite (.IXIC) saw a notable 1.37% increase, closing at 14,339.99 points, while the Dow Jones Industrial Average (.DJI) experienced a more modest 0.18% rise, concluding the day at 36,117.57 points.
The trading volume on U.S. exchanges was relatively heavy, with 11.2 billion shares changing hands, surpassing the 20-session average of 10.8 billion shares.
Looking ahead, traders have largely priced in the likelihood of the Federal Reserve maintaining unchanged interest rates at its upcoming meeting.
Thursday’s data indicated that the number of Americans filing new unemployment benefit claims increased less than expected.
Market watchers are eagerly awaiting the Labor Department’s jobs report on Friday, as it could provide insights into the pace of economic softening in the U.S. and influence expectations regarding the timing of Fed rate cuts.
It is anticipated that non-farm payrolls will show an increase of 180,000 jobs last month, following a rise of 150,000 in October.
According to the CME Group’s FedWatch tool, interest rate futures suggest a nearly 64% probability of a rate cut as early as March.
However, Merck (MRK.N) saw a decline of 1.7% in its shares after the company’s immunotherapy combination failed in a lung cancer study, somewhat tempering the overall gains in the Dow.