Dow hits record high; Nvidia falls after forecast

By Johann M. Cherian and Noel Randewich

(Reuters) – Stocks on Wall Street rose, with the Dow hitting a record on Thursday following robust U.S. economic data, while AI chipmaker Nvidia slipped after its broadly in-line forecast failed to impress investors.

The U.S. economy grew faster than initially expected due to strong consumer spending, according to a report from the U.S. Commerce Department, supporting expectations that the U.S. is likely to avoid a recession.

“A downward revision in inflation accompanied by an upward revision in spending suggests a soft landing,” said Jeffrey Roach, chief economist at LPL Financial.

Nvidia’s quarterly revenue forecast late Wednesday disappointed investors who were used to the chipmaker comfortably beating expectations in recent quarters.

Nvidia shares fell 3.2%, reducing 2024 earnings to 144%.

Notably, the sell-off at Nvidia did not spread to other AI-related stocks. Microsoft gained 1.9 percent, while Google owner Alphabet rose nearly 1 percent.

Broadcom and Advanced Micro Devices each rose about 1%.

“It’s too early to be bearish on AI companies. We believe there is more upside,” said Terry Sandven, chief equity strategist at US Bank Wealth Management. “We see the AI ​​revolution as still in its early stages and that bodes well for technology companies.”

Apple rose 2.5 percent after Citigroup named the iPhone maker its top pick in AI.

The Dow Jones Industrial Average hit an all-time high, while the S&P 500 index was less than 1 percent below its July record high as expectations for a September rate cut remained strong.

The S&P 500 was last trading 0.76 percent higher at 5,634.92 points.

The Nasdaq Composite Index rose 0.93% to 17,718.61 points, while the Dow rose 1.10% to 41,542.10 points.

Nine of the eleven S&P 500 sector indices rose, led by the energy sector with a gain of 1.49%, followed by a gain of 1.46% in industrials.

A report from the Labor Department showed unemployment figures for last week slightly lower than expected.

The report on personal consumption expenditures in June, due on Friday, could provide clues about the course of the central bank’s monetary easing.

CrowdStrike rose 5.3% after the cybersecurity company beat revenue estimates for the quarter, while Dollar General slumped 30% after sharply cutting its revenue and profit forecasts for the year.

In the S&P 500, advancing stocks outnumbered declining stocks by a ratio of 4.6:1.

The S&P 500 recorded 64 new highs and four new lows; the Nasdaq recorded 81 new highs and 76 new lows.

(Reporting by Purvi Agarwal and Johann M. Cherian in Bengaluru; Editing by Pooja Desai, Shounak Dasgupta and Shinjini Ganguli)