U.S. stocks rose on Thursday, setting the stage for new record highs. Investors welcomed a series of updates including solid U.S. economic data, Micron’s (MU) upbeat earnings and China’s promises of more stimulus as they awaited Jerome Powell.
The Dow Jones Industrial Average (^DJI) rose 0.4%, while the S&P 500 (^GSPC) gained 0.3% after both indicators fell from record highs set in the previous session. The tech-heavy Nasdaq Composite (^IXIC) gained 0.3% amid a sharp rise in Micron’s shares.
Stocks are looking solidly positive again thanks to a triple dose of optimism about AI trading, the health of the US economy and China’s stimulus measures, which could feed through to US markets.
Nvidia (NVDA) supplier Micron raised its revenue forecast for the next quarter, citing strong demand for its memory chips used in AI data centers. Chip stocks AMD (AMD), ASML (ASML) and STMicro (STM) rose in the wake of the earnings report.
Additionally, a final update from the U.S. government on second-quarter GDP growth beat Wall Street expectations, while weekly jobless claims unexpectedly fell to a four-month low.
Meanwhile, China’s top leaders signaled they were doing everything they could to revive the ailing economy with new promises to boost fiscal spending, stem the property crisis and shore up the stock market. A big jump in mainland stocks put the CSI 300 (000300.SS) on course for its best week in a decade.
The bullish mood was helped by growing expectations for another big rate cut by the Federal Reserve. Traders are pricing in a 60% chance of a 0.5% move at the November meeting, up from 40% a week ago.
Read more: What the Fed’s Rate Cut Means for Bank Accounts, CDs, Loans and Credit Cards
Investors are waiting for Fed Chair Powell’s statement later to test those hopes, the highlight of a parade of Fed speakers on Thursday. Their remarks will set the stage for Friday’s much-anticipated talk on the PCE index, the Fed’s preferred measure of inflation.
Super Micro shares drop 13% after Justice Department investigation report
Shares of Super Micro Computer plummeted more than 13% and trading was temporarily halted amid volatility after the Wall Street Journal reported that the Justice Department is investigating the data center server maker.
The investigation comes after short-seller Hindenburg Research published a report in August that complained, among other things, about “accounting manipulation” at the major shareholder in artificial intelligence.
Stocks fell as much as 17% immediately following the report and were temporarily halted due to volatility.
Meta stocks briefly hit all-time high as Wall Street bets on AI vision
Yahoo Finance’s Laura Bratton reports:
Meta shares (META) briefly hit a new intraday high on Thursday, following a developer event that showcased the company’s artificial intelligence ambitions.
Shares rose to $577 after market open, before falling 0.7% by mid-morning, or around $564.
At Meta Connect 2024 on Wednesday, CEO Mark Zuckerberg unveiled Meta’s latest AI model: Llama 3.2.
Read more here.
Target CEO hopes the company will eventually eliminate locked cases in the fight against shoplifting
Yahoo Finance’s Brooke DiPalma reports:
Target (TGT) is trying to find an answer to a persistent problem in retail: shoplifting.
“I feel so much better today than I did a year ago,” Target CEO Brian Cornell said in an interview with Yahoo Finance for the Lead This Way series. “It comes down to support at the federal level, at the state level, at the local level.”
Cornell commented on recent legislation, including initiatives by the state of California to “crack down” on abuses in the marketplace.
Read more here.
A government shutdown has been averted for now, but two new spending conflicts are looming
Yahoo Finance’s Ben Werschkul reports:
The final piece of legislation to prepare for the elections has now been completed, after Congress averted a shutdown and funded the government for three months.
“I want to thank both chambers of Congress,” President Joe Biden said in a statement, “for this bipartisan agreement and for avoiding a costly government shutdown.”
But the reprieve will be short-lived, because the plan leaves lawmakers in the middle of multiple spending discussions when they return to Washington in November after voters have had their say.
Read more here.
Oil drops 3% after Saudi Arabia reports promise more supply in December
Oil prices fell more than 3% on Thursday after the Financial Times reported that Saudi Arabia is determined to begin reversing voluntary production cuts from December 1, even if it means lower oil prices.
On Thursday, West Texas Intermediate (CL=F) fell below $68 a barrel. Brent (BZ=F), the international benchmark price, also fell below $71 a barrel.
OPEC+ has delayed the release of more barrels to market in an effort to support higher prices. The Saudi-led oil alliance is losing market share to the U.S. and other crude-producing nations.
Last year, the US produced record amounts of oil and natural gas.
Stocks rise on strong economic growth figures, chip stocks gain
U.S. stocks rose on Thursday, with the S&P 500 (^GSPC) hitting an intraday record high after the release of a stronger-than-expected GDP number and upbeat earnings from Micron (MU) sent the chip sector higher.
The Dow Jones Industrial Average (^DJI) rose 0.5%, while the S&P 500 added 0.7%. The tech-heavy Nasdaq Composite (^IXIC) led the markets higher, rising 1.2% while Micron shares rose.
Micron’s results helped fuel growth across the chip sector, including AI powerhouse Nvidia (NVDA), which rose more than 2% in early trading.
The latest economic data showed that U.S. gross domestic product (GDP) rose at an annualized rate of 3% in the second quarter, faster than Wall Street had expected.
New economic data is better than expected
The U.S. economy grew at an annual rate of 3 percent in the second quarter, faster than Wall Street had expected.
The Bureau of Economic Analysis’ third estimate for the second quarter of U.S. gross domestic product (GDP) was unchanged from the second estimate, which showed annualized growth of 3 percent. Economists had estimated that the reading showed annualized growth of 2.9 percent. The third estimate for the second quarter of GDP confirms that economic growth was higher than the 1.4 percent annualized growth seen in the first quarter.
Separately, data released Thursday by the U.S. Department of Labor showed that 218,000 jobless claims were filed in the week ended Sept. 21, below Wall Street expectations of 223,000. It marked the lowest level of weekly claims since mid-May.
Also reported Thursday was that durable goods orders held steady in August, better than the 2.6% decline Wall Street had expected.
