U.S. Stocks Rebound On Upbeat Nvidia Earnings

Stocks moved mostly higher during trading on Thursday, regaining ground after moving sharply lower on Tuesday and Wednesday. The Nasdaq showed a particularly strong upward move, reflecting strength in the tech sector.

The Nasdaq surged 213.93 points or 1.7 percent to 12,698.09, bouncing back near the nine-month closing high set on Monday. The S&P 500 also jumped 36.04 points or 0.9 percent to 4,151.28, while the narrower Dow bucked the downtrend and edged down 35.27 points or 0.1 percent to 32,764.65.

The rebound on Wall Street partly reflected a positive reaction to earnings news from Nvidia (NVDA), with the chipmaker soaring by 24.4 percent to a record closing high.

Nvidia spiked after reporting better than expected fiscal fourth quarter results and forecasting fiscal second quarter revenue well above analyst estimates.

The news contributed to a rally by semiconductor stocks, resulting in a 6.8 percent surge by the Philadelphia Semiconductor Index. The index reached its best closing level in over a year.

Industry giant Intel (INTC) bucked the uptrend, however, tumbling by 5.5 percent and contributing to the modest drop by the Dow amid competition concerns.

Software and computer hardware stocks also saw significant strength, driving the NYSE Arca Computer Hardware Index and the Dow Jones U.S. Software Index up by 3.9 percent and 3.2 percent, respectively.

On the other hand, energy stocks have moved sharply lower the day, with a steep drop by the price of crude oil weighing on the sector.

With crude for July delivery plunging $2.51 to $71.83 a barrel, the Philadelphia Oil Service Index plummeted by 2.6 percent and the NYSE Arca Oil Index dove by 2.2 percent.

Tobacco, gold and telecom stocks also showed notable moves to the downside, partly offsetting the strength in the tech sector.

Meanwhile, traders kept an eye on any developments in the U.S. debt ceiling negotiations amid lingering concerns about a potential default.

Reflecting the default concerns, Fitch Ratings placed the United States “AAA” credit on “rating watch negative,” signaling downside risks to U.S. creditworthiness.

On the U.S. economic front, revised data released by the Commerce Department showed economic growth in the U.S. slowed less than previously estimated in the first three month of 2023.

The Commerce Department said gross domestic product climbed by 1.3 percent in the first quarter compared to the previously estimated 1.1 percent increase. Economists had expected the pace of GDP growth to be unrevised.

Despite the upward revision, the GDP growth in the first quarter still reflects a slowdown from the 2.6 percent jump seen in the fourth quarter of 2022.

A separate report released by the Labor Department showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended May 20th.

The Labor Department said initial jobless claims crept up to 229,000, an increase of 4,000 from the previous week’s revised level of 225,000.

Economists had expected jobless claims to inch up to 245,000 from the 242,000 originally reported for the previous week.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday. Hong Kong’s Hang Seng Index plunged by 1.9 percent and South Korea’s Kospi fell by 0.5 percent, although Japan’s Nikkei 225 Index bucked the downtrend and rose by 0.4 percent.

The major European markets also moved to the downside on the day. While the U.K.’s FTSE 100 Index declined by 0.7 percent, the French CAC 40 Index and the German DAX Index both dipped by 0.3 percent.

In the bond market, treasuries slid firmly into negative territory over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.5 basis points to a two-month closing high of 3.814 percent.

Looking Ahead

Trading on Friday may be driven by reaction to a report on personal income and spending, which includes a reading on inflation said to be preferred by the Federal Reserve.

Developments regarding the debt ceiling negotiations may also attract attention along with reports on durable goods orders and consumer sentiment.

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