The U.S. stock market saw a significant boost on Thursday, driven by strong performances in the tech sector. The Dow Jones Industrial Average rose by 0.4%, approaching record highs, while the tech-heavy Nasdaq Composite managed to stay just above the flatline. The S&P 500 also flirted with an intraday high before slipping slightly below. This surge in stock values came as investors reacted positively to an optimistic forecast from Taiwan Semiconductor Manufacturing Company (TSMC), a key player in the semiconductor industry.
TSMC, the primary chipmaker for tech giants such as Apple and Nvidia, reported a remarkable 54% jump in quarterly profits, exceeding Wall Street expectations. Furthermore, the company raised its revenue forecast for 2024, citing an increase in demand for artificial intelligence (AI) chips. This development helped ease concerns about the future of AI-related chip sales, which had been triggered by a recent downbeat forecast from another chipmaker, ASML. In response to TSMC’s strong performance and upbeat outlook, the company’s U.S.-listed shares surged by nearly 10%, propelling its market value past $1 trillion.
Nvidia and Other Chip Stocks Rally
TSMC’s positive forecast spurred a rally across the semiconductor sector, with major players such as Nvidia, Arm, and Broadcom all seeing gains of over 2%. Nvidia, in particular, reached an intraday all-time high, driven by renewed optimism in the AI market. Nvidia’s growth is seen as a key indicator of the broader tech industry’s strength, and the company has consistently outperformed expectations in the wake of the AI boom. As a result, investor confidence in the potential of AI technology to drive future revenue for the tech sector has been restored.
TSMC’s role as the dominant contract chipmaker for Nvidia and Apple further solidified its position in the market, with analysts pointing to its upbeat revenue forecast for 2024 as a clear sign of continued growth. The company’s positive results were a welcome relief for the market, especially after recent concerns about the broader tech sector’s future performance. Arm, another significant player in the AI chip space, and Broadcom, which supplies chips for various industries, also benefited from the surge in investor sentiment.
Strong Economic Data Boosts Confidence
In addition to the tech sector’s stellar performance, strong U.S. economic data provided further support for the stock market rally. Retail sales rose by 0.4% in September, surpassing the 0.3% expected by analysts, indicating that consumer spending remains robust. This follows the release of a strong jobs report earlier in the month, which showed surprising gains in employment, suggesting that the U.S. economy could be gaining momentum after a period of uncertainty.
Weekly jobless claims also contributed to the positive sentiment, coming in at 241,000—well below expectations and a significant drop from the previous week’s revised figure of 260,000. These indicators have sparked debates among investors about the Federal Reserve’s next move regarding interest rates. While some believe that the Fed may hold off on rate cuts in November, the overall strength of the economy has encouraged optimism in the market. Additionally, Netflix shares surged by 5% in after-hours trading following better-than-expected earnings and subscriber growth, further signaling that Big Tech remains a focal point for investors.
