US stocks today: Nasdaq, S&P 500 rise as Nvidia revives AI rally; Fed outlook in focus

The AI trade regained momentum on Thursday as Nvidia's upbeat revenue forecast reassured investors that demand for artificial intelligence remains strong, lifting technology stocks and pushing the Nasdaq to a fresh gain. The focus now shifts from the chipmaker's results to Federal Reserve Chair Kevin Warsh's first Jackson Hole speech, where investors will look for clues on the path for interest rates.

The Nasdaq Composite gained 1.57% to 26,540.78, while the S&P 500 rose 0.72% to 7,730.73, according to preliminary data. The Dow Jones Industrial Average added 0.19% to 53,564.21.

Nvidia shares jumped after the chipmaker's robust forecast met lofty investor expectations, reinforcing the view that the technology rally may have further room to run as companies driving the AI buildout continue to post strong growth. The results also eased concerns that AI demand could be starting to weaken as investors increasingly scrutinise the huge capital spending required to support the technology.


"Nvidia's results show that the AI boom is not running out of demand ... while delivering that growth is ‌becoming more expensive and capital-intensive," said Lale Akoner, global market strategist at eToro.

Morgan Stanley said Nvidia's forecast for 70% revenue growth next year was well above its estimate for 52% growth, while the consensus estimate was closer to 40%.

"We would expect Nvidia to continue to knock down barriers to higher growth," said analyst Joseph Moore in the note.

Nvidia, however, has warned that shortages of memory components could limit the pace of growth across the industry, underscoring the supply constraints that could emerge as AI infrastructure spending continues.

The rally was concentrated in technology, with the S&P 500 Information Technology sector leading gains among the benchmark's 11 sectors. Semiconductor stocks also advanced broadly.

"While Nvidia’s earnings beat and strong guidance restarted the party, it's apparent that not all sectors of the market were invited," said Charlie Ripley, senior investment strategist at Allianz Investment Management.

"Market headwinds continue to be a factor as higher interest rates, geopolitical tensions and global ⁠trade, among other things, are playing a role in the weakness seen across other sectors."

The broader market also had company-specific catalysts. Salesforce surged after raising its annual revenue and profit forecasts and launching a new plug-in integrated with Anthropic's Claude AI models. CrowdStrike climbed after the cybersecurity software provider raised its annual revenue forecast and beat second-quarter earnings estimates.

The Salesforce and CrowdStrike results helped ease concerns that increasingly capable AI tools could disrupt the traditional software industry. That gave investors more reason to return to beaten-down software stocks, narrowing some of the gap with semiconductor shares, which have been among the biggest beneficiaries of the AI boom. ServiceNow and Palo Alto Networks also gained.

Outside technology, market attention was also drawn to oil. Brent crude prices rose more than $2 a barrel after a Wall Street Journal report said U.S. President Donald Trump was not interested in returning to the terms of a memorandum of understanding reached with Iran in June.

Fed back in focus

With Nvidia's earnings now out of the way, investors are turning to Warsh's Jackson Hole address on Friday for signals on the Fed's policy outlook, particularly after fresh inflation data complicated expectations for interest rates.

"A common theme from Warsh has been his focus on the supply side of the economy and we expect that to remain the focus," said Christopher Hodge, chief U.S. economist at Natixis.

"I highly doubt that Warsh will be too declarative in his assessments of what’s to come, but it would not be surprising if he expressed some skepticism about previous policy assumptions and generally struck an anti-doctrinaire approach."

A hotter-than-expected Personal Consumption Expenditures reading on Wednesday had weakened some of the optimism created by a benign consumer inflation report earlier this month. Two Fed officials on Thursday also reiterated concerns about the inflation outlook and maintained their stance that rate hikes may be needed to contain price pressures.

At the same time, the labour market continued to show resilience. The number of Americans filing for unemployment benefits for the first time fell for a second consecutive week, while the overall number declined to its lowest level in a month.

That leaves investors balancing two competing signals. Nvidia has reinforced the case for continued strength in the AI trade, but inflation and interest rates remain the bigger macro question for the broader market. Warsh's comments could therefore determine whether Thursday's technology-led rally extends beyond the AI winners or remains concentrated in a narrow group of stocks.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)