Chip index at record, boosts Wall Street as trade hopes build
U.S. stocks rose on Wednesday, extending a strong start to the quarter as rising hopes of a trade deal with Beijing and bullish reports lifted the semiconductor index to a record high.
Advanced Micro Devices Inc jumped 9.08%, the biggest gainer on the S&P 500, and Intel Corp rose 2.50% after Nomura Instinet started coverage of both the stocks with "buy" ratings.
Chip stocks, which are heavily reliant on China for their revenue, have surged more than 27% this year on optimism about trade and recovering demand for chips.
The Philadelphia Semiconductor index jumped as much as 3% to a record high.
"Tech and semis are a huge part of what China does and what the U.S. consumes," said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.
"The price action in this sector (semiconductors) will be viewed as a positive going forward."
The rally came as White House economic adviser Larry Kudlow sounded upbeat about the trade talks, adding that Beijing and Washington hope to get closer to a deal this week.
"The fact that a trade deal is probably at hand is helping lift markets," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
The Institute for Supply Management came out with its U.S. services sector PMI for March, which was below estimates and at its lowest since August 2017.
Earlier, the ADP National Employment Report showed U.S. private employers added 129,000 jobs in March, below economists` estimates.
However, growth concerns have taken a back seat this week after upbeat manufacturing data from China and the United States, as well as a report showing China`s services sector rose to a 14-month high in March.
At 12:55 p.m. ET the Dow Jones Industrial Average was up 62.01 points, or 0.24%, at 26,241.14. The S&P 500 was up 13.41 points, or 0.47%, at 2,880.65 and the Nasdaq Composite was up 74.32 points, or 0.95%, at 7,923.01.
The gains put the S&P 500 index 1.7% away from a record high in September as a dovish Federal Reserve and trade hopes set the stage for a strong start to the quarter.
Ten of the 11 major S&P sectors were higher, with the technology index`s 1.04% rise providing the biggest boost as chip stocks surged.
According to a report, Taiwan Semiconductor Manufacturing Co has seen an increase in 7nm chip orders, while another said Nomura expects the current cyclical downturn in chipmakers to lead to a 10% decline in chip sales this year, but a 7%-9% rebound from 2020 to 2025.
Capping gains on the Dow, Boeing Co dropped 1.3% after Baird said it expects Wall Street to cut earnings estimates "considerably" after the company reports delivery numbers next week. The numbers could reflect the 737-MAX groundings following the Ethiopian crash, Baird said.
Advancing issues outnumbered decliners for a 2.32-to-1 ratio on the NYSE and a 1.86-to-1 ratio on the Nasdaq.
The S&P index recorded 56 new 52-week highs and three new lows, while the Nasdaq recorded 79 new highs and 22 new lows.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.