Wall Street rises as trade hopes build; chip index hits record
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 10.9%, the biggest gainer on the S&P 500, and Intel Corp rose 2.6% after Nomura Instinet started coverage of both the stocks with "buy" ratings.
Semiconductor stocks, which are heavily reliant on China for their revenue, have surged more than 25% this year on optimism about trade and recovering demand for chips.
The Philadelphia Semiconductor index jumped 2.9% to a record high.
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.
"Hopes that a trade deal is imminent will alleviate some of the concerns about global economy as well as the U.S. economy."
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 11:37 a.m. ET the Dow Jones Industrial Average was up 77.51 points, or 0.30%, at 26,256.64, the S&P 500 was up 16.11 points, or 0.56%, at 2,883.35 and the Nasdaq Composite was up 78.92 points, or 1.01%, at 7,927.61.
The gains put the S&P 500 1.6% away from a record high hit in September as a dovish Federal Reserve and trade hopes set the stage for a strong start to the quarter.
Seven of the 11 major S&P sectors were higher, with the technology index`s 1.2% rise providing the biggest boost as chip stocks surged.
A DigiTimes report that Taiwan Semiconductor Manufacturing Co has seen an increase in 7nm chip orders also boosted the sector.
Nomura said it expects the current cyclical downturn in chipmakers to lead to a 10% decline in chip sales this year, but sees a 7%-9% rebound from 2020 to 2025, according to a report.
Capping gains on the Dow, Boeing Co dropped 1.1% 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.
GameStop Corp fell 5.1% after the videogame retailer forecast current-quarter profit below analysts` estimates.
Advancing issues outnumbered decliners for a 2.07-to-1 ratio on the NYSE and a 1.73-to-1 ratio on the Nasdaq.
The S&P index recorded 52 new 52-week highs and two new lows, while the Nasdaq recorded 72 new highs and 20 new lows.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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