The S&P 500 and Nasdaq Composite Index hit new records at the open on Thursday as Nvidia's (NVDA) surprise earnings boosted optimism that there's more room for AI to rise.
The tech-heavy Nasdaq Composite Index (^IXIC) rose 0.8%, while the S&P 500 Index (^GSPC) rose 0.6% before narrowing its gains. The Dow Jones Industrial Average (^DJI), which has a low proportion of tech stocks, fell 0.3%.
Shares of AI pioneer Nvidia rose more than 8% to above $1,000 for the first time after the company reported first-quarter profits that far surpassed Wall Street expectations. The semiconductor giant also raised its guidance, easing concerns that AI demand was losing momentum.
Other chip and AI stocks also rose following their earnings reports, with server makers Dell (DELL) and Supermicro Computer (SCMI) rising about 6% and 5%, respectively.
The Nvidia frenzy helped the market shake off fears of rising interest rates that had led to a selloff the previous day. Stocks fell after Federal Reserve minutes showed some policymakers may keep interest rates higher for longer this year if inflation doesn't subside as expected.
read more: How does the labor market affect inflation?
The S&P Global Purchasing Managers Index (PMI) rose to 54.4 in May from 51.3 the previous month. Preliminary data beat economists' expectations and showed business activity accelerated at the fastest pace in two years despite the Federal Reserve's efforts to curb upward price pressures.
Meanwhile, expectations for AI have provided a tailwind for companies. Shares of cloud-based analytics company Snowflake (SNOW) rose 4% on strong sales outlook. Meanwhile, News Corp.'s (NWS) stock price rose after the media giant signed a deal with Microsoft-backed OpenAI, giving ChatGPT access to content from the likes of the Wall Street Journal.
live2 updates
