The S&P 500 ended higher on Wednesday, lifted by gains in Nvidia, Amazon and other technology-related heavyweights following recent jitters about artificial intelligence. The bounceback in tech names extended into Canada, where the TSX closed at a record high and found further strength from a rally in oil prices.
Nvidia climbed 1.6% after the world’s most valuable company said it had signed a multi-year deal to sell to Meta Platforms millions of its current and future AI chips. Meta added 0.6%.
Sandisk, Western Digital and Seagate Technology Holdings climbed between 1.7% and 4.4% each, adding to strong gains in recent months fueled by massive AI-related demand for their storage technology.
AI-related stocks lost ground earlier this month as investors worried about high valuations and how long it might take for AI investments to boost revenue growth.
Amazon added 1.8% and Microsoft rose 0.7% on Wednesday.
“At a certain point, weakness in tech was bound to bring in the marginal buyer. These are still high-growth names. They were expensive and they’ve gotten cheaper,” said Ross Mayfield, an investment strategy analyst at Baird in Louisville, Kentucky. “There are still a lot of people who want to be exposed to tech for the next several years.”
Software makers also showed signs of recovery following recent worries that improved AI tools could lead to more competition and squeeze their profit margins. The S&P 500 software and services sector increased 1.1% after tumbling earlier this month. It was helped by advancing Cadence Design Systems shares, after the chip-design software provider beat fourth-quarter revenue estimates. Palo Alto Networks dropped 6.8% after trimming its annual profit forecast.
The S&P 500 climbed 0.56% to end the session at 6,881.31 points. The Nasdaq gained 0.78% to 22,753.64 points, while the Dow Jones Industrial Average rose 0.26% to 49,662.66 points. The Nasdaq was up as much as 1.4% before trimming its gains in the afternoon.
The S&P/TSX Composite Index was up 1.50% at 33,389.73, eclipsing its last record high earlier this month. The TSX tech sector was up 3.9%.
The TSX’s materials sector rose 2.8% as gold prices gained 2.2% amid lingering geopolitical concerns.
Defence stocks gained as Canada, seeking to cut its reliance on the U.S. arms industry, wants to dramatically increase the amount of weapons it buys from domestic firms. Bombardier jumped 5.9%, Magellan gained 1.9% and MDA Space rose nearly 3.2%.
The energy sector also rose as oil prices settled up by more than 4%. Traders priced in potential supply disruptions amid concerns of conflict between the U.S. and Iran. Meanwhile, talks between Ukraine and Russia in Geneva ended without a breakthrough.
Among individual movers, TFI International slipped 3.3% after the logistics firm forecast first-quarter adjusted profit below estimates.
Elsewhere, iA Financial shed 11% after the insurance firm reported fourth-quarter profit below estimates, while asset marketplace firm RB Global jumped 3.8% after reporting fourth-quarter revenue beating estimates.
Eight of the 11 S&P 500 sector indexes rose, led by energy, up 2%, followed by a 1% gain in consumer discretionary .
Federal Reserve officials were in nearly unanimous agreement to keep interest rates on hold at their meeting last month, but remained split over what might happen next, according to minutes of their January 27-28 meeting released on Wednesday.
Traders are pricing in a roughly 50% chance of a rate cut of at least 25 basis points by the Fed’s June meeting, according to CME’s FedWatch Tool.
Data released on Wednesday showed solid business spending and U.S. economic growth in the fourth quarter.
Analog Devices rose 2.6% after the chipmaker forecast second-quarter results above Wall Street estimates.
Global Payments jumped over 16% after the payment technology firm projected annual adjusted profit above expectations.
Moderna climbed about 6% after the U.S. Food and Drug Administration agreed to review its influenza vaccine, reversing an earlier decision rejecting the application.
Advancing issues outnumbered falling ones within the S&P 500 by a 1.7-to-one ratio. The S&P 500 posted 23 new highs and three new lows; the Nasdaq recorded 101 new highs and 120 new lows.
Reuters, Globe staff