UPDATE: Wall Street’s main indexes are surging today, propelled by a robust quarterly update from TSMC, the world’s largest chipmaker, which has ignited renewed investor optimism surrounding artificial intelligence (AI). This development has extended the rally among chip stocks, with investors eager for the latest insights on AI-driven growth.
In early trading on October 12, 2023, the Dow Jones Industrial Average climbed 83.57 points (0.18%) to reach 46,336.88. The S&P 500 increased by 19.62 points (0.29%) to hit 6,690.68, while the Nasdaq Composite surged 115.74 points (0.51%) to 22,785.82. The technology sector within the S&P 500 rose by 0.5%, reflecting the widespread enthusiasm for AI advancements.
TSMC’s bullish outlook includes raising its full-year revenue forecast, which has resonated well with investors. However, despite the overall positive sentiment, US-listed shares of TSMC fell by 1.1% in volatile trading after initially rising more than 2% before the market opened. Major US chipmakers such as Nvidia (+1.2%), Micron Technology (+2.7%), and Broadcom (+1.3%) all contributed to the market’s upward momentum.
Market analysts are noting a shift in investment patterns. “AI, the demand and the euphoria around it has been fuelled by the megacap and the hyperscaler spending for it,” stated Joe Mazzola, head of trading and derivative strategy at Charles Schwab. “Now we’re in kind of that second season … where investors are maybe moving away just from investing in the chip makers and the hyperscalers and looking for some adjacent plays.”
The ongoing enthusiasm for AI, coupled with speculation about potential US rate cuts, has been a significant factor driving market performance in recent months. AI-related technology stocks have been among the biggest contributors to market gains this week. Additionally, strong earnings reports from major US banks have signaled economic resilience, even as key macroeconomic reports face delays due to the ongoing US government shutdown.
In other developments, the S&P 500 communication services sector advanced 0.7%, while financials dipped 0.9%. Salesforce shares surged by 7.1% after the company projected revenues exceeding $60 billion by 2030, surpassing Wall Street estimates. Conversely, Hewlett Packard Enterprise saw a significant slump of 8.6% following a forecast of annual profit and revenue that fell short of expectations.
Meanwhile, the recent tensions between the US and China regarding rare earth controls continue to loom over the markets. China has accused the US of inciting panic and has rejected calls from the White House to ease restrictions. This geopolitical backdrop, combined with US President Donald Trump’s threats regarding tariffs and future meetings with Chinese officials, has kept investors on edge.
As of today, advancing issues outnumbered decliners by a ratio of 1.15-to-1 on the NYSE and 1.17-to-1 on the Nasdaq. The S&P 500 recorded 27 new 52-week highs and five new lows, while the Nasdaq Composite noted 85 new highs and 33 new lows.
Investors should continue to monitor these developments closely as the landscape evolves. The momentum surrounding AI and chip stocks is palpable, and with further earnings reports and economic indicators on the horizon, the trajectory of the markets remains highly dynamic.
