Semis soar as Microsoft and AMD fuel AI rally
Nasdaq up ~2.5%, S&P 500 up ~1.6%, Dow up ~0.6%
All S&P 500 sectors green; Tech leads
Euro STOXX 600 index up ~0.8%
Dollar dips; gold, bitcoin gain; crude up >3%
U.S. 10-Year Treasury yield falls to ~4.10%
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SEMIS SOAR AS MICROSOFT AND AMD FUEL AI RALLY
Chip stocks are on track for their strongest day since May 2023 on Wednesday after Microsoft MSFT.O reported a massive capex increase as it buys more processors in a race to dominate AI, and after Advanced Micro Devices AMD.O forecast quarterly revenue above estimates, banking on strong demand for its chips.
The PHLX semiconductor index .SOX is surging 5.6%. A close with that gain would mark its strongest one-day percentage increase since May 26, 2023 when chips and other AI-related stocks surged after a blowout forecast from Nvidia NVDA.O.
Nvidia on Wednesday is hooting up 12%, lifted by expectations Microsoft and AI rivals Amazon AMZN.O, Alphabet GOOGL.O and Meta Platforms META.O would keep its top-of-the-line processors in high demand.
Microsoft said its capex exploded 78% to $19 billion in its fiscal fourth quarter, with cloud and AI-related spending accounting for nearly all of the expenditures.
Advanced Micro Devices is jumping 5% after the Santa Clara, California company ratcheted up its 2024 forecast for its AI chip sales by $500 million to $4.5 billion and said supplies would remain tight through 2025.
Nvidia's processors are the gold standard for training AI models, and AMD is widely viewed as one of the few viable competitors.
Broadcom AVGO.O is jumping 10%, while memory chipmaker Micron Technology MU.O and chip manufacturing equipment maker ASML Holding ASML.AS are both adding about 7%.
Wednesday's rally follows heavy selling in chipmakers through much of July, reflecting investor concerns that an months long rally fueled by AI optimism may have gone too far.
The PHLX index remains down about 13% from its record high close on July 10, and it is up 23% so far in 2024.
(Noel Randewich)
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FOR WEDNESDAY'S EARLIER LIVE MARKETS POSTS:
BOFA CLIENTS SHUN SMALL CAPS DESPITE RECENT STRENGTH - CLICK HERE
NASDAQ JUMPS ON CHIP CHEER; FOMC RESULTS DUE - CLICK HERE
S&P 500 INDEX: FENCED IN BY FIBONACCI AHEAD OF THE FED - CLICK HERE
WATCH EARNINGS FOR THE TECH AND EU CYCLICALS ROTATION - CLICK HERE
WHAT IF LONG-DATED BOND YIELDS DO NOT FALL? - CLICK HERE
STOXX UP 1% AS VOLATILE JULY DRAWS TO CLOSE - CLICK HERE
EUROPE BEFORE THE BELL: APPETITE FOR TECH, BANK RESULTS - CLICK HERE
BOJ HIKES, FED NEXT - CLICK HERE
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