NEW YORK: Wall Street’s main indexes rose on Thursday but were off session highs after technology stocks lost some of their Nvidia-driven momentum, as uncertainty around the US monetary policy path weighed on investor sentiment.
Nvidia gained 1.9 percent after the world’s most valuable company forecast sales above analysts’ estimates for the final three months of the year and surpassed expectations for third-quarter revenue.
“This situation is fine for now, but what happens in three months’ time when the market waits with bated breath for Nvidia’s next quarterly earnings update? Even though Nvidia’s profits and cash flow remain as healthy as an ultramarathon runner, there are some red flags to consider,” said Dan Coatsworth, head of markets at AJ Bell.
CEO Jensen Huang shrugged off concerns about AI on a call with analysts, saying, “We see something very different.”
A year-long rally in high-flying technology stocks had begun to lose some steam as investors became increasingly cautious of a potential AI bubble.
Concerns about monetization prospects over the technology, circular spending within the sector and debt issuance have weighed on markets with the Nasdaq sharply off its October high and Nvidia down nearly 9 percent from its peak.
At 11:26 a.m. ET, the Dow Jones Industrial Average rose 302.34 points, or 0.66 percent, to 46,441.56, the S&P 500 gained 57.17 points, or 0.86 percent, to 6,699.33, and the Nasdaq Composite gained 241.88 points, or 1.07 percent, to 22,806.11.
Most megacap and growth stocks advanced, with Tesla leading gains. The S&P 500 growth index rose 1.1 percent, outpacing its value counterpart.
All 11 S&P sub-sectors were trading higher, with technology in the lead. The Philadelphia SE Semiconductor index added 0.9 percent, with Advanced Micro Devices, Broadcom and other chip-related stocks jumping.
Walmart advanced 6.7 percent after the retailer raised its annual forecast for the second time this year and also set a December date to change its stock listing to the Nasdaq from the NYSE.
Meanwhile, data showed US job growth accelerated in September, but the unemployment rate rose to 4.4 percent, suggesting labor market conditions remained sluggish.
“The December FOMC meeting is shaping up as a showdown between hawks focused on inflation risks and doves focused on labor market softness,” said Jason Pride, chief of investment strategy and research at Glenmede.
“Today’s report likely doesn’t halt the rate-cut cycle, but it does reduce the urgency of the next move.” Traders continued to bet the Federal Reserve will skip an interest rate cut in December, though there was a small pull-back after the release of the jobs data.
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