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US stock indices rose to fresh all-time highs on Thursday, as another set of blockbuster results from Nvidia pushed the chipmaker’s market value above $2.5tn for the first time.
Wall Street’s S&P 500 rose 0.3 per cent to 5,320.44 in early afternoon in New York. The tech-dominated Nasdaq Composite added as much as 0.9 per cent, also hitting a record high, before paring gains.
Shares in Nvidia jumped 11 per cent after the company late on Wednesday announced stronger than expected earnings, a 10-for-1 stock split and bullish forward guidance. Revenues soared 262 per cent over the past quarter, exceeding analysts’ lofty predictions, and the company raised its quarterly cash dividend by 150 per cent.
Investors have become hooked on Nvidia as the company has repeatedly blown past analysts’ revenue and margin forecasts and emerged as the dominant provider of the graphics processing units that power generative AI.
The tech giant’s results on Wednesday were “perfect”, said Charles-Henry Monchau, chief investment officer at Bank Syz. “There was a lot of hype ahead of earnings and the stock price has already doubled since the start of the year [but] they managed to beat by all counts,” he added.
Its bumper results meant Nvidia’s market cap on Thursday rose by around $220bn to surpass $2.5tn for the first time, making it larger than Amazon and Tesla combined. Chip companies including ASML, Applied Materials and Marvell Technology were swept up in the Nvidia-inspired rally, with the Philadelphia Semiconductor index, which tracks 30 of the world’s biggest semiconductor manufacturers, rising 1.3 per cent.
The market gains came even after the release of the minutes of the May 1 Federal Open Market Committee meeting, which revealed that US officials would be ready to raise interest rates if inflation began to creep higher again.
“The fact that Fed minutes showed a hypothetical openness to hiking rates again, should inflation remain too high, was a bit of a wake-up call,” said Mike Zigmont, head of trading and research at Harvest Volatility Management.
Jobs data released on Thursday showed initial applications for US unemployment aid fell by 8,000 to 215,000 in the week to May 18. Economists had forecast 220,000 new applications.
The figures — although better than expected — suggest the labour market remains relatively tight, and sparked a small sell-off in US government debt. Yields on interest rate-sensitive two-year Treasuries rose 0.06 percentage points to 4.94 per cent.
German two-year bond yields meanwhile rose to 3.07 per cent, their highest level since late November.
The move came after collective wage agreements in the first quarter gave Eurozone workers an average 4.7 per cent annual pay increase, up slightly on the previous three-month period. Traders reacted by paring back the number of rate cuts expected from the European Central Bank this year.
European stocks made modest gains, with the region-wide Stoxx 600 closing 0.06 per cent higher.
Germany’s Dax inched 0.06 per cent higher and France’s Cac 40 added 0.1 per cent. London’s FTSE 100 fell 0.4 per cent, dragged lower by utilities groups.
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