NEW YORK (AP) — The U.S. stock market is rallying after it seemed to successfully pass a couple of crucial tests. Not only did Nvidia provide another blockbuster profit report that suggested AI superstar
stocks can keep rising, a mixed report on the U.S. jobs market also kept alive hopes for more cuts to interest rates by the Federal Reserve. The S&P 500 rose 1.5% in early trading Thursday and pulled closer to its all-time high set almost a month ago. The Dow Jones Industrial Average climbed 627 points, or 1.4%, and the Nasdaq composite rose 2.1%. Walmart also rose after delivering better-than-expected results,
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) — Some relief is running through Wall Street on Thursday, and U.S. stock futures are climbing after another blockbuster profit report from Nvidia suggested it and other stars created by the artificial-intelligence frenzy may indeed deserve their high stock prices.
S&P 500 futures rose 1.6% before the opening bell Thursday. Dow Jones Industrial Average futures rose 1% and Nasdaq composite futures were 2.1% higher.
Nvidia rose 5.2% in pre-market trading after reporting a big profit for the summer that topped analysts’ expectations. The AI chip giant also gave a forecast for revenue that again easily cleared analysts’ estimates.
Also lifting optimism was a mixed report about the U.S. job market from the federal government, one that keeps alive hope that the Federal Reserve may deliver another energizing cut to interest rates next month. The report showed hiring by U.S. employers was stronger in September than economists expected, but the unemployment rate also worsened slightly.
Wall Street had been bracing for big swings on Thursday, depending on how Nvidia’s profit report and the jobs update played out. The U.S. stock market has been shaky for weeks because of worries that Nvidia and other AI superstar stocks simply shot too high in the mania around AI, with critics saying they were reminiscent of the 2000 dot-com bubble that ultimately imploded. Doubts were also rising about whether the Fed would continue cutting interest rates.
Nvidia is the most valuable company on Wall Street, having briefly topped $5 trillion in value. That means its movements have more of an effect on the S&P 500 than any other stock, and it can single-handedly steer the index’s direction some days.
By continuing to deliver big profits for investors, Nvidia has mostly quieted recent criticism that its shares shot too high, too fast.
Nvidia has become a bellwether for the broader frenzy around artificial-intelligence technology, because other companies are using its chips to ramp up their AI efforts.
Walmart also reported its latest quarterly results Thursday. The Arkansas retailer delivered another standout quarter, posting strong sales and profits that blew past Wall Street expectations as it continues to lure cash-strapped Americans who have grown increasingly anxious about the economy and prices.
With other retailers dialing back projections, the nation’s largest retailer raised its financial outlook Thursday after its strong third quarter, setting itself up for a strong holiday shopping season.
The Labor Department said Wednesday that it will not be releasing a full jobs report for October because the 43-day shutdown meant it couldn’t calculate the unemployment rate and some other key numbers.
The job market has been slowing enough this year that the Fed has already cut its main interest rate twice. Lower rates can give a boost to the economy and to prices for investments, and the expectation on Wall Street had been for more cuts, including at the Fed’s next meeting in December.
But some Fed officials are hinting that they should pause next month, in part because inflation has stubbornly remained above the Fed’s 2% target. Lower interest rates can worsen inflation.
In Europe, Germany's DAX rose 1.3%. Britain's FTSE 100 rose 0.7% the CAC 40 in Paris added 1.1%.
In Asia, Japan’s Nikkei 225 index rose 2.6% higher as technology stocks rallied. South Korea’s Kospi added 1.9%.
Chinese markets ended mixed as reports said the government might be planning more measures to try to revive the ailing property sector.
