Nasdaq ends sharply higher as Alphabet and AMD fuel AI surge

It was a straight shot up on all the indexes today as enthusiasm ran high on the launch of Google’s new AI model, taking not only all of tech along for the ride but all the other sectors as well.  The value-ridden Dow was the exception reaching a high of a +110 by 2 pm, but then falling to a +62 at close.  As today’s expert put it, “We’re in this weird market, one day tech leads, the next day value.”  

Besides the AI fervor, other good news included new unemployment claims increasing less than expected, further supporting optimism for a March rate cut currently put at odds of 64%. Friday’s payroll report will hopefully bolster that sentiment with the forecast being for 180,000 new jobs in November. Volume remains heavy at 11.2 billion. 

Nasdaq ends sharply higher as Alphabet and AMD fuel AI surge

By Noel Randewich and Shristi Achar A

Thu December 7, 2023 4:00 PM

DJ: 36,054.43  -70.13        NAS: 14,146.71  -83.20        S&P: 4,549.34  -17.84      12/6

DJ: 36,117.38  +62.95       NAS: 14,339.99  +193.28     S&P: 4,585.59  +36.25     12/7

Dec 7 (Reuters) - The Nasdaq ended sharply higher on Thursday after Alphabet and Advanced Micro Devices sparked a megacap rally on fresh optimism about artificial intelligence.  Shares of Alphabet (GOOGL.O) 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 center AI chips could reach $45 billion this year.  Other heavyweight tech-related stocks also gained, with Nvidia (NVDA.O), Amazon (AMZN.O), Meta Platforms (META.O) and Apple (AAPL.O) rising for most of the session. The Philadelphia semiconductor index (.SOX) jumped and increased its 2023 gain to around 48%, much of that fueled 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 (.SPX) has steadily climbed since the end of October on expectations the Federal Reserve has finished its campaign of interest rate hikes and that it could begin cutting rates in March.

S&P 500 (.SPX) gained 36.25 points, or 0.80%, to end at 4,585.59 points, while the Nasdaq Composite (.IXIC) gained 193.28 points, or 1.37%, to 14,339.99. The Dow Jones Industrial Average (.DJI) rose 62.95 points, or 0.17%, to 36,117.38.  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 U.S. 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% 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 (MRK.N) fell after the drugmaker's immunotherapy combination failed in a lung cancer study. 

Volume on U.S. exchanges was relatively heavy, with 11.2 billion shares traded, compared to an average of 10.8 billion shares over the previous 20 sessions.