Market Snapshot: Nasdaq jumps on AI optimism, Dow drops on debt ceiling angst

by | May 25, 2023 | Stock Market

U.S. stocks were trading mostly higher on Thursday after Nvidia Corp.’s earnings report sent shares of the chip maker soaring and the broader Nasdaq along with it, while the Dow Jones Industrial Average was lower and looked set to fall for a fifth straight session as talks to lift the U.S. debt ceiling dragged on in Washington.Price action
The Dow
fell 140 points, or 0.4%, to 32,660.

The S&P 500
rose 28 points, or 0.7%, to 4,144.

The Nasdaq Composite
jumped 207 points, or 1.7%, to 12,691.

On Wednesday, the Dow fell for a fourth straight session as debt-ceiling worries continued to hang over the market.

What’s driving markets Fears about the looming U.S. debt-ceiling deadline were offset Thursday by excitement about the prospects for artificial-intelligence technology after chip maker Nvidia’s results late Wednesday, resulting in a stark bifurcation between the Nasdaq and the Dow. Nvidia
shares surged 25%. Depending on where Nvidia finishes Thursday’s session, the chip maker could add more than $200 billion to its market capitalization, according to Dow Jones Market Data. It was also on the cusp of joining a small club of companies worth more than $1 trillion, while its gains also helped boost shares of related firms. “It’s the Nvidia effect,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott, during a phone interview. “As if these AI companies needed another event to spur interest.” Shares of Inc. AI and Advanced Micro Devices Inc. AMD were among those bathing in Nvidia’s AI glow early Thursday. The optimism over semiconductors bodes well for the wider tech sector, according to Mark Newton, head of technical strategy at Fundstrat: “Semis in relative terms to broader technology, have the potential to break back out to new all-time highs this week on a ratio basis. That would be important and positive for this leading sector to show such strength.” As the Nasdaq jumped, the Dow, a gauge arguably more sensitive to broader economic conditions, continued to drag as debt-ceiling talks loomed over markets. Falling crude oil prices weighed on shares of energy firms and dragged the Dow down even further. West Texas Intermediate crude for July delivery CL00 CL.1 CLN23 were off 4% in recent trade at $71.36 per barrel. Ructions at the short end of the Treasury market — where some 1-month bill yields
broke above 7% — illustrate trader anxiety that unless Congress can reach an agreement to extend the debt-ceiling the U.S. government may technically default at the beginning of June. Yields have also …

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