US STOCKS-Nvidia's revenue forecast lifts Wall Street; investors eye the Fed's Warsh

The tech-heavy Nasdaq outperformed ‌peers on ​Thursday after Nvidia's blockbuster results reaffirmed the strength of the AI boom and fueled gains in technology stocks. Nvidia shares jumped 8.9% after the chip company's robust forecast met lofty investor expectations, bolstering the view that the tech rally still has room to run as companies at the heart of AI buildout continue to deliver ‌impressive growth. "Nvidia's results show that the AI boom is not running out of demand ... while delivering that growth is becoming more expensive and capital-intensive," said Lale Akoner, global market strategist at eToro.

Morgan Stanley said in a note on Thursday that Nvidia's forecast for revenue growth of 70% next year is well above Morgan Stanley's estimate for a 52% rise and that the consensus estimate is closer to 40%. "We would expect Nvidia to continue to knock down barriers to higher ‌growth," said analyst Joseph Moore in the note. Nvidia has warned that shortages of memory components could curb the pace of the industry's growth.

At 2 p.m. EDT (1800 GMT), the Dow Jones Industrial Average was up 159.44 points, ‌or 0.30%, at 53,623.32, the S&P 500 gained 55.83 points, or 0.73%, to 7,731.53 and the Nasdaq Composite gained 367.66 points, or 1.41%, to 26,497.85. U.S. chip-linked stocks broadly rose, with the semiconductor index adding almost 1.6%.

The S&P 500 Information Technology sector rose 3%, making it the best gainer among the S&P 500's 11 constituents, which were mostly in weak territory. Salesforce surged 21.6% after raising annual revenue and profit forecasts, and rolling out a new plug-in integrated with Anthropic's Claude AI models. The stock was the biggest boost to the blue-chip Dow, and ⁠was set for ​its best one-day jump in six years. CrowdStrike climbed 19.4% after ⁠the cybersecurity software provider raised its annual revenue forecast and topped second-quarter earnings estimates.

Both these reports calmed worries that advanced AI tools could upend the traditional software industry, boosting investor appetite for beaten-down software stocks and narrowing the gap with semiconductors, which are seen as the primary ⁠beneficiaries of the AI boom. Other software firms ServiceNow and Palo Alto Networks gained 8.8% and 13.7%, respectively. Moderna dropped 4.7% after unveiling a $2 billion convertible bond sale, while HP lost 5% after shipments and margins of its PC unit declined in the third quarter. Discount ​retailer Dollar General fell nearly 4% after it maintained its annual sales forecast.

FOCUS SHIFTS BACK TO MACRO With Nvidia results out, investor attention turns to Federal Reserve Chair Kevin Warsh's first Jackson Hole ⁠address on Friday for hints on the central bank's stance on the latest inflation data and the U.S. Treasury's efforts to tame yields.

"A common theme from Warsh has been his focus on the supply side of the economy and we expect that to remain the focus," said Christopher ⁠Hodge, ​chief U.S. economist for Natixis. "I highly doubt that Warsh will be too declarative in his assessments of what’s to come, but it would not be surprising if he expressed some skepticism about previous policy assumptions and generally struck an anti-doctrinaire approach." A hotter-than-expected Personal Consumption Expenditures reading on Wednesday muddied the policy outlook, dampening some of the optimism generated by a benign consumer inflation report earlier this month. Two Fed officials shared their ongoing concerns about ⁠the inflation outlook on Thursday, reiterating their stance on rate hikes to combat price pressures. Meanwhile, the number of Americans seeking unemployment benefits for the first time fell for a second week, while the overall number slid to ⁠the lowest in a month, signaling a stable labor market.

Declining ⁠issues outnumbered advancers by a 1.02-to-1 ratio on the New York Stock Exchange. There were 132 new highs and 66 new lows on the NYSE. On the Nasdaq, 2,572 stocks rose and 2,110 fell as advancing issues outnumbered decliners by a 1.22-to-1 ratio.

The S&P 500 posted 10 new 52-week highs and 6 new lows while the ‌Nasdaq Composite recorded 54 new highs ‌and 69 new lows.