S&P 500 and Nasdaq Rally as US GDP Data and Chip Stocks Lift Mood

US stocks surged on Thursday, with the S&P 500 closing at a record high, buoyed by strong economic data and positive earnings from chipmaker Micron. The Dow Jones Industrial Average and Nasdaq also saw significant gains, reflecting investor optimism amid favorable market conditions.

Key Takeaways

• The S&P 500 closed at a record high of 5,745.39, marking its 42nd record close this year.
• The Dow Jones Industrial Average rose by 0.62%, while the Nasdaq Composite gained 0.6%.
• Strong second quarter GDP growth of 3% exceeded Wall Street expectations.
• Weekly jobless claims fell to their lowest level in four months, indicating a robust labor market.
• Micron's earnings report boosted the semiconductor sector, with shares rising 15%.

Strong Economic Data Fuels Market Optimism

The U.S. economy showed resilience with a final update on second quarter GDP growth, which came in at 3%, surpassing the anticipated 2.9%. This growth rate is a significant improvement from the 1.4% seen in the first quarter, indicating a rebound in economic activity.

Additionally, the Labor Department reported that weekly jobless claims dropped to 218,000, below the expected 223,000, marking the lowest level since mid-May. This positive labor market data has contributed to the overall bullish sentiment in the stock market.

Micron's Earnings Boost Semiconductor Stocks

Micron Technology's impressive earnings report played a pivotal role in lifting the semiconductor sector. The company reported a brighter-than-expected outlook driven by strong demand for its memory chips, particularly in artificial intelligence applications. Following the earnings announcement, Micron's stock surged by 15%, leading to a nearly 3.7% increase in the PHLX Semiconductor Index.

Other chipmakers also benefited from this momentum, with notable gains in:

• Advanced Micro Devices (AMD): +3.4%
• Qualcomm (QCOM): +2.4%
• Intel (INTC): +1.3%

Global Factors Contributing to Market Gains

Investor sentiment was further bolstered by news from China, where government officials announced new fiscal spending measures aimed at revitalizing the economy. This included efforts to address the ongoing property crisis and support the stock market. As a result, Chinese equities saw significant gains, with the KraneShares CSI China Internet ETF rising over 11%.

Looking Ahead

As the market continues to react to these developments, investors are eagerly awaiting the upcoming reading on the Personal Consumption Expenditures (PCE) index, the inflation metric favored by the Federal Reserve. This data will be crucial in shaping future monetary policy and market expectations.

In individual stock news, Super Micro Computer (SMCI) faced a sharp decline of 12% following reports of a Department of Justice investigation, highlighting the volatility that can accompany market movements.

Overall, the combination of strong economic indicators, positive corporate earnings, and supportive global policies has created a favorable environment for U.S. stocks, leading to a notable rally in the markets.

Sources

• Stock market today: S&P 500 clinches fresh record amid GDP data, chip stock gains, Yahoo Finance.
• Stock market today: S&P 500 clinches fresh record amid GDP data, chip stock gains, Yahoo Finance.
• Stock market today: S&P 500 clinches fresh record amid GDP data, chip stock gains, Yahoo Finance.