Nasdaq drives Wall Street higher post GDP data; Nvidia dips

Nasdaq rises, Nvidia slips: The Nasdaq led Wall Street's main indexes higher on Thursday, after data revealed the US economy remains robust, though Nvidia shares took a hit as its revenue forecast fell short of high investor expectations.

The Commerce Department reported that the US economy grew faster than previously estimated, fuelled by strong consumer spending.

"Downward revisions to inflation, alongside an upward revision in spending, strengthen the case for a soft landing," said Jeffrey Roach, Chief Economist at LPL Financial.

Throughout the week, markets have seen minor fluctuations as investors anticipated Nvidia's results to determine if the company could sustain its exceptional revenue growth.

Nvidia misses investor hopes

Despite Nvidia's strong second-quarter performance, its in-line revenue forecast for the upcoming quarter left investors disappointed, causing its shares to drop by 3.2 per cent.

"This is the first instance where there has been criticism of the forecast despite the revenue beat. It wasn't as impressive as some investors had hoped," commented Peter Andersen, founder of Andersen Capital Management.

However, Nvidia's semiconductor peers like Broadcom and Advanced Micro Devices (AMD) gained 1.7 per cent and 1.1 per cent respectively, contributing to a 1.6 per cent rise in the Philadelphia SE Semiconductor index.

Nvidia's major megacap customers, who have been central to the market's enthusiasm over AI's potential to boost corporate profits, also saw gains. Microsoft, Meta, and Alphabet each rose by over 1.5 per cent.

Apple, on the other hand, surged over 2.4 per cent after Citigroup selected it as its top AI pick, surpassing Nvidia. This propelled the tech sector up by 0.9 per cent.

Markets climb midday

By 11:45 am ET, the Dow Jones Industrial Average had risen 289.54 points (0.70 per cent) to 41,380.96, the S&P 500 increased by 39.02 points (0.70 per cent) to 5,631.20, and the Nasdaq Composite climbed 182.80 points (1.04 per cent) to 17,738.82.

Broader market gains were led by the communication services sector, with nine out of 11 sectors trading higher on the S&P 500.

"We're rebounding from Nvidia-related concerns and seeing a relief rally," said Jay Hatfield, portfolio manager at InfraCap.

The S&P 500 is now just 0.6 per cent away from a record high, while the Dow has reached an all-time peak. Expectations for a September interest rate cut remain strong.

Currently, the odds of a 25 basis point rate cut in September are at 67.5 per cent, with a 32.5 per cent chance of a 50 bps cut, according to CME Group's Fed Watch Tool.

In other economic news, the Labor Department reported that jobless claims were slightly lower than expected for the previous week.

Fed policy awaited Friday

Looking ahead, Friday's Personal Consumption Expenditures data for June could provide more insights into the Federal Reserve's approach to monetary policy easing.

Elsewhere, CrowdStrike gained 4.6 per cent after beating quarterly revenue estimates, while Dollar General saw a sharp 28 per cent decline after slashing its annual sales and profit forecasts.

On the NYSE, advancing issues outnumbered decliners by a ratio of 2.66-to-1, and on the Nasdaq, the ratio was 2.22-to-1.

The S&P index recorded 50 new 52-week highs and four new lows, while the Nasdaq recorded 65 new highs and 71 new lows.

(With Reuters Inputs)