NASDAQ 100, Dow Jones, S&P 500: Chip Stocks Soar on AI Excitement, Marvell Technology Leads the Way

Highlights

• Stock market indexes rise on positive debt ceiling developments.
• Strong consumer spending, economic indicators boost expectations of interest rate hikes.
• Chip stocks surge due to AI optimism, Marvell Technology leads the rally.

Overview

The major stock market indexes in the US, such as the Dow Jones Industrial Average, the S&P 500 Index, and the NASDAQ Composite, are significantly up during the mid-session on Friday.

This increase is driven by positive developments in discussions about raising the US debt ceiling. However, there is still a struggle between Democratic and Republican negotiators to reach an agreement before the impending deadline.

Debt Ceiling Talks Progress

Investors don’t seem too concerned about conflicting reports. One report suggests that US President Joe Biden and top congressional Republican Kevin McCarthy are close to reaching an agreement to raise the government’s debt ceiling by $31.4 trillion for two years, with a deadline of June 1. However, a prominent Republican has mentioned disagreements over certain welfare programs for low-income Americans. Additionally, Treasury Secretary Janet Yellen has extended the deadline for raising the debt limit to June 5, after the market closed.

Economic Data Fuels Rate Hike Expectations

In economic news, US data showed stronger-than-expected consumer spending in April. The increase in personal consumption expenditures (PCE) has raised expectations that the Federal Reserve will increase interest rates again, possibly in June or July.

The reports also indicate a resilient labor market, a rebound in factory production, and increased business activity, all suggesting that the economy is experiencing a revival in the spring after a slower start in the first quarter. These reports have also increased the likelihood of the US central bank raising rates in June.

Chip Stocks Surge on AI Optimism

While some investors are focused on the debt ceiling debate and the possibility of more interest rate hikes by the Federal Reserve, others are showing interest in chip stocks, which have been surging for two consecutive days due to optimism surrounding artificial intelligence (AI). Marvell Technology, a semiconductor company, is leading this tech-driven rally. Its stock has jumped by 28% following better-than-expected earnings. Marvell Technology also expects accelerated revenue growth in the second half of the fiscal year, with CEO Matt Murphy attributing this growth to AI as a significant factor.

Nvidia Surges Toward Trillion-Dollar Mark

Another semiconductor company, Nvidia, saw a 1.7% increase in its stock price the day after it surged by 24% due to an exceptional earnings report related to AI. This upward movement brings Nvidia closer to achieving a market capitalization of $1 trillion.

Nvidia’s Surge Lifts AI Stocks

Monolithic Power Systems is among the stocks benefiting from Nvidia’s positive earnings report and the excitement surrounding AI. Its stock has rallied by 6.7%, while Arista Networks has gained 8.1%. Broadcom has risen by 7%, NXP Semiconductors by 4.4%, and Adobe by 4.4%.