Nasdaq, S&P 500 ride chip-stock wave before Fed verdict; Microsoft slips
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US private payrolls miss expectations in July - ADP
Fed expected to hold rates steady at 2 p.m. ET
Mastercard gains after Q2 profit beat
Boeing shares rise after it names new CEO
Indexes: Dow off 0.08%, S&P up 1.21%, Nasdaq up 2.03%
Updated at 9:54 a.m. ET/1354 GMT
By Ankika Biswas and Johann M Cherian
July 31 (Reuters) - The Nasdaq and the S&P 500 rose more than 1% each on Wednesday after a bullish forecast from AMD boosted struggling chip stocks, while Microsoft faltered ahead of an interest-rate decision from the U.S. central bank.
Advanced Micro Devices AMD.O soared 10.1% after lifting its2024 forecast for AI-chipsales, spreading the cheer to Nvidia NVDA.O, whichrose 10.2%. The broader Philadelphia SE Semiconductor index .SOX was up5.0%.
However, MicrosoftMSFT.O lost 1.6% as it plans to spend more this fiscal year to build its AI infrastructure, even as growth in its cloud business slowed - another sign that the payoff from hefty investments in the technology could takelonger than hoped.
"AMD's results pleased investors more than Microsoft's disappointed, and as a result people are adding to positions in the semiconductor space," said Sam Stovall, chief investment strategist at CFRA Research.
Other megacaps also rose, with Apple AAPL.Ogaining 0.9%, Meta Platforms META.O adding 1.5% and Amazon.com AMZN.O up 2.0% ahead of their quarterly results, due through the week.
At 9:54 a.m. ET, the Dow Jones Industrial Average .DJI was down 33.60 points, or 0.08%, at 40,709.73, the S&P 500 .SPX was up 65.74 points, or 1.21%, at 5,502.18, and the Nasdaq Composite .IXIC was up 347.43 points, or 2.03%, at 17,494.85.
The S&P 500 hit a one-week high, with Information Technology .SPLRCT stocksleading sectoral gains by3.0%.
But techand chip stocks have taken a hit this month, after prompting a record-breaking Wall Street run this year on enthusiasm surrounding AIadoption and the prospectof early rate cuts from the U.S. Federal Reserve.
Results from Alphabet, Tesla and Microsoft failed to thrill andinvestors are moving to underperforming sectors, questioning if the AI-driven rally has run its course.
The small-caps Russell 2000 .RUT index and the blue-chip Dow are on track for their best month this year.
On the flip side, the chips indexis set forits first monthly decline in three and its worst month since October 2023, while the S&P 500 is on track for a marginal rise, helped by the day's gains.
Focus will now shift to the Fed'sdecision and commentary on interest rates. The central bankis expected to hold rates steady andopen the door for a September rate cut.
With traders fully pricing in a cut by September, according to CME's FedWatch, the fear is thatany disappointment on this front could amplify the recent equity selloff.
Fresh employment data showed a lower-than-expected rise in U.S. private payrolls in July, but that is in all likelihood not a true reflection of the labor market, which continues to moderate gradually.
Among others, Boeing BA.Nclimbed 0.3% after naming aerospace industry veteranKelly Ortberg its new president and CEO.
Mastercard MA.Ngained 4.2% after the payments giant'ssecond-quarter profit rose 17%.
Pinterest PINS.N slumped 10.1% after forecasting current-quarter revenue below expectations, while Match Group MTCH.O jumped 11% after a second-quarter revenue beat and a plan to lay off about 6% of its staff.
Advancing issues outnumbered decliners by a 2.21-to-1 ratio on the NYSE, andby a 1.24-to-1 ratio on the Nasdaq.
The S&P index recorded 43 new 52-week highs and one newlow, while the Nasdaq recorded 54 new highs and 42 new lows.
Reporting by Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Pooja Desai and Saumyadeb Chakrabarty
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