NEW YORK — Relief is running through Wall Street on Thursday, and the U.S. stock market is rallying after it seemed to 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 kept alive hopes that the Federal Reserve can deliver more cuts to interest rates.
The S&P 500 climbed 1.7 per cent and pulled closer to its all-time high, which it set almost a month ago. The Dow Jones Industrial Average was up 581 points, or 1.3 per cent, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 2.2 per cent higher.
Nvidia led the way and rose 3.9 per cent after reporting another big profit for the summer that topped analysts’ expectations, while also giving a forecast for coming revenue that easily cleared analysts’ estimates.
That helped quiet worries that Wall Street’s most influential stock and others caught up in the frenzy around artificial-intelligence technology simply shot too high. Critics have ben saying they were reminiscent of the 2000 dot-com bubble that ultimately imploded, and Nvidia’s stock had briefly dropped more than 10 per cent from its record.
By delivering big profits and indicating more in the future, Nvidia and other stocks can justify their stocks’ price gains and make them look less expensive.
Given the forecasts that Nvidia gave late Wednesday, “it is very hard to see how this stock does not keep moving higher from here,” according to analysts at UBS led by Timothy Arcuri. They also said “the AI infrastructure tide is still rising so fast that all boats will be lifted.”
Other AI-linked stocks rose in the wake of Nvidia’s report, including gains of 5.1 per cent for Palantir Technologies and 2.8 per cent for Oracle.
Stocks outside of AI, meanwhile, rose on continued hopes that the Fed may deliver another energizing cut to interest rates next month.
Thursday’s delayed jobs report showed that hiring by U.S. employers was stronger in September than economists expected, but the unemployment rate also worsened slightly.
Financial markets seemed to pick the data apart for encouraging signals, according to Seema Shah, chief global strategist at Principal Asset Management. The strong hiring numbers may suggest the economy remains solid, while rising unemployment may give the Fed reason to cut its main interest rate at its next meeting in December.
Traders still see it as relatively unlikely, giving it a 42 per cent probability, but that’s better than the 30 per cent chance they saw a day earlier, according to data from CME Group.
What the Fed does is critical for the stock market because prices ran to records in part because of expectations for continued cuts to rates.
Lower rates can give a boost to the economy and to prices for investments, but they can also worsen inflation, which has stubbornly remained above the Fed’s 2 per cent target.
Elsewhere on Wall Street, Walmart rose 3.3 per cent after the retailer delivered another standout quarter. It reported 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.
In the bond market, the yield on the 10-year Treasury eased to 4.10 per cent from 4.13 per cent late Wednesday.
In stock markets abroad, indexes rallied across much of Europe and Asia.
Japan’s Nikkei 225 jumped 2.6 per cent, and South Korea’s Kospi rose 1.9 per cent for two of the bigger gains.
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AP Writers Teresa Cerojano and Matt Ott contributed.