Nasdaq spikes after Google’s new AI model launch
The Nasdaq ended sharply higher as shares of Alphabet jumped after the launch of the Google parent’s newest AI model.
Many traders on Wall Street expect a Federal Reserve interest rate cut by March 2024. Photo: AP
Alphabet and Advanced Micro Devices sparked a megacap rally on fresh optimism about artificial intelligence.
Shares of Alphabet jumped as analysts cheered the launch of the Google-parent’s newest AI model, while AMD soared after the company estimated the potential market for its data centre AI chips could reach $US45 billion ($A69 billion) this year.
Other heavyweight tech-related stocks also gained, with Nvidia, Amazon, Meta Platforms and Apple rising for most of the session.
The Philadelphia semiconductor index jumped and increased its 2023 gain to around 48 per cent, much of that fuelled by bets about the future of AI.
“Today it’s an AMD-Google rally. There’s a contagion effect across the market. Everyone wants to get on the bandwagon,” said Jay Hatfield, CEO of Infrastructure Capital Management in New York.
“We’re kind of in this weird market, a tag-team market, where one day tech leads, and then the next day value and the broad market lead.”
The S&P 500 has steadily climbed since the end of October on expectations the US Federal Reserve has finished its campaign of interest rate hikes and that it could begin cutting rates in March.
According to preliminary data, the S&P 500 gained 35.66 points, or 0.80 per cent, to end at 4,585.60 points, while the Nasdaq Composite gained 193.28 points, or 1.37 per cent, to 14,339.99. The Dow Jones Industrial Average rose 62.70 points, or 0.17 per cent, to 36,117.13.
Traders have almost fully priced in the likelihood of the Fed keeping rates unchanged at its meeting next week.
Data on Thursday showed the number of Americans filing new claims for unemployment benefits increased less than expected last week to a seasonally adjusted 220,000 for the week.
A Labor Department jobs report due on Friday could hint at how quickly the US economy is softening and may sway expectations about when the Fed is likely to begin cutting rates. Non-farm payrolls are expected to have increased by 180,000 jobs last month after rising by 150,000 in October.
Interest rate futures imply a nearly 64 per cent chance of a rate cut as soon as March, according to the CME Group’s FedWatch tool.
Limiting gains in the Dow, shares of Merck fell after the drugmaker’s immunotherapy combination failed in a lung cancer study.