NEW YORK: 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.
US-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 surged 2.4% to notch a record high, while Nvidia, Microchip Technology and Marvell Technology rose between 3.1% and 5.4%.
The Philadelphia SE semiconductor index rose 3.2%, inching closer to its record high, hit in December 2023.
Megacaps such as Microsoft, Amazon.com and Meta Platforms also gained between 1.1% and 2.0%.
Apple 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 jumped 2.0% to hit a record high, while the rate-sensitive real estate and utilities sectors lost 0.9% and 1.4%, respectively, keeping the S&P 500’s gains in check.
The healthcare index 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 also lost 2.9%, weighing on the blue-chip Dow.
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 US 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 was down 18.69 points, or 0.05%, at 37,247.98, the S&P 500 was up 22.54 points, or 0.48%, at 4,761.75, and the Nasdaq Composite was up 176.08 points, or 1.19%, at 15,031.70.
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