The benchmark Nasdaq and S&P 500 jumped on Thursday, recouping recent losses on a boost from chip and megacap stocks, as investors scouted for clues on whether the Fed’s rate cuts were imminent and assessed a mixed bag of corporate earnings.
U.S.-listed shares of Taiwan Semiconductor Manufacturing (TSMC) jumped 8.0%, after the world’s largest contract semiconductor maker projected a more-than 20% growth in 2024 revenue, on booming demand for high-end chips used in artificial intelligence applications.
Advanced Micro Devices (AMD.O), opens new tab surged 2.4% to notch a record high, while Nvidia (NVDA.O), opens new tab, Microchip Technology (MCHP.O), opens new tab and Marvell Technology (MRVL.O), opens new tab rose between 3.1% and 5.4%.
The Philadelphia SE semiconductor index (.SOX), opens new tab rose 3.2%, inching closer to its record high, hit in December 2023.
Megacaps such as Microsoft (MSFT.O), opens new tab, Amazon.com (AMZN.O), opens new tab and Meta Platforms (META.O), opens new tab also gained between 1.1% and 2.0%.
Apple (AAPL.O), opens new tab climbed 3.2%, after BofA Global Research upgraded the stock to “buy” from “neutral”, marking the iPhone-maker’s first rating upgrade this year.
The information technology index (.SPLRCT), opens new tab jumped 2.0% to hit a record high, while the rate-sensitive real estate (.SPLRCR), opens new tab and utilities (.SPLRCU), opens new tab sectors lost 0.9% and 1.4%, respectively, keeping the S&P 500’s gains in check.
The healthcare index (.SPXHC), opens new tab declined 0.8%, to an over two-week low, dragged down by an 11.4% drop in Humana, as the health insurer forecast fourth-quarter medical costs to be higher than previously expected.
Peer UnitedHealth (UNH.N), opens new tab also lost 2.9%, weighing on the blue-chip Dow (.DJI), opens new tab.
Data showed the number of Americans filing new claims for unemployment benefits fell last week to a late-2022 low, suggesting a likely solid job growth in January.
“There’s still uncertainty around where we are in the broader business cycle, which is driving volatility both in the rates and equity markets, and a lot of that hinges on where inflation and the Fed will go,” said Dylan Kremer, chief investment officer at Certuity.
The Federal Reserve is walking a tightrope to rein in inflation without causing a growth slowdown, as the U.S. central bank’s “Beige Book” report, a snapshot of the economy’s health, showed economic activity saw little or no change from December through early January.
Traders now see a 56% chance for a 25-basis-point rate cut in March, lower from an over-80% probability a month ago, according to the CME Group’s FedWatch Tool.
The S&P 500 and Nasdaq had closed lower for two sessions on Wednesday, following a strong December retail sales figure and as policymakers continue to talk down hopes for an early start to rate cuts.
Investors will parse comments by Atlanta Fed President Raphael Bostic, a voting member this year, later in the day.
At 11:24 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab was down 18.69 points, or 0.05%, at 37,247.98, the S&P 500 (.SPX), opens new tab was up 22.54 points, or 0.48%, at 4,761.75, and the Nasdaq Composite (.IXIC), opens new tab was up 176.08 points, or 1.19%, at 15,031.70.
KeyCorp(KEY.N), opens new tab shed 5.1%, after the lender posted a drop in fourth-quarter profit, while Birkenstock(BIRK.N), opens new tab sank 8.2% after missing quarterly profit expectations.
Spirit Airlines (SAVE.N), opens new tab fell 12.1%, after Citigroup downgraded the stock to “sell” from “neutral”.
Advancing issues outnumbered decliners by a 1.04-to-1 ratio on the NYSE and for a 1.03-to-1 ratio on the Nasdaq.
The S&P index recorded 22 new 52-week highs and seven new lows, while the Nasdaq recorded 45 new highs and 120 new lows.
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