NEW YORK – Wall Street’s main indexes closed more than 1 per cent higher on May 20, bouncing back from a three-day selloff with a boost in sentiment from technology and chip stocks, which rose ahead of Nvidia’s quarterly results.
Investors will look to the latest report from Nvidia , the leading artificial intelligence chipmaker and the world’s most highly valued company, for reassurance that the appetite for spending on AI remains strong enough to support lofty valuations across the technology sector.
The Philadelphia SE Semiconductor index rallied sharply ahead of the report with big gainers including Astera Labs and ARM Holdings.
“Technology is driving the bus again today, and the AI theme. We’ve swapped back from yesterday’s concerns about rising rates and potential inflation and are leaning more into the all-things-AI story,” said Ms Carol Schleif, chief market strategist at BMO Private Wealth in Minneapolis.
“It’s actually a little bit unusual because you would expect the market to sit pretty quiet waiting for Nvidia’s results later today. But there’s clearly a lot of optimism.”
The lack of a resolution to the US-Israeli war on Iran had sent US indexes lower in the last three days as investors worried that elevated oil prices would boost inflation enough to lead the Federal Reserve to raise interest rates.
On May 20, Iran’s foreign ministry spokesperson said the exchange of messages between Iran and the US has continued.
President Donald Trump said negotiations with Iran were in the final stages and that the US may have to attack Iran even harder but would wait and see if they can reach a deal.
While investors are still monitoring fluctuating energy prices and inflation, Ms Schleif said “they really want to look beyond what’s going on in the Middle East” and focus on the potential of AI.
Also supporting stocks, the benchmark 10-year Treasury yield eased on May 20 after rising for three straight days and touching a 16-month high.
According to preliminary data, the S&P 500 gained 79.06 points, or 1.08 per cent, to end at 7,432.67 points, while the Nasdaq Composite gained 398.33 points, or 1.54 per cent, to 26,269.04.
The Dow Jones Industrial Average rose 647.44 points, or 1.31 per cent, to 50,011.32.
Stocks gradually added to gains following the release of minutes from the Federal Reserve’s last meeting, which showed more officials saying the central bank should lay the groundwork for a possible rate hike.
Bets for a Fed rate hike in December were choppy after the meeting and recently showing a 36.8 per cent probability, down from 42 per cent on May 19, according to the latest data from CME Group’s FedWatch tool.
Citing uncertainty around issues such as oil prices, tariffs and AI, Mr Brian Jacobsen, chief economic strategist at Annex Wealth Management, said after the minutes that “it’s hard to take any of their forward guidance as more than just mere guesswork.”
Among the 11 major S&P 500 sectors, big gainers included consumer discretionary and technology. On the flip side, energy dropped with oil prices.
Consumer staples slipped with pressure from Target. Shares in the retailer declined after it warned of a challenging macroeconomic backdrop even as it doubled its annual sales growth forecast.
Falling oil prices boosted sentiment around airline stocks with Delta Air Lines, United Airlines, Southwest Airlines and Alaska Air advancing.
Intuit shares declined after Reuters, citing an internal memo, reported that the company is laying off about 3,000 employees. REUTERS
