Silicon Surge Electrifies Wall Street: S&P 500 Inches Toward All-Time High on AI Hype

• S&P 500 approaches all-time highs on Thursday, propelled by chipmakers like Nvidia amid confidence in artificial intelligence.

• Taiwan Semiconductor Manufacturing (TSMC) forecasts over 20% revenue growth by 2024, lifting shares of major chipmakers.

• S&P 500 edges up, Dow rises 0.54%, and Nasdaq gains 1.35%. Positive job market indicators contrast with uncertainties around the Federal Reserve's interest rate decisions, affecting rate-sensitive sectors.

Thursday's dramatic increase in U.S. equities saw the S&P 500 close to all-time highs as advances in Nvidia and other chipmakers were fueled by confidence about artificial intelligence.

The biggest contract semiconductor manufacturer in the world, Taiwan Semiconductor Manufacturing (TSMC), predicted a more than 20% increase in revenue by 2024 due to the growing demand for high-end circuits used in artificial intelligence applications. This led to a roughly 10% increase in TSMC's U.S.-listed shares.

The market capitalization of heavyweight chipmaker Nvidia (NVDA.O) reached a historic high of 1.9%, becoming it the most traded firm on Wall Street with about $28 billion worth of shares moved. Competitor Advanced Micro Devices (AMD.O) opened a new tab and saw a 1.6% increase in addition to a record high.

Qualcomm (QCOM.O), Marvell Technology (MRVL.O), and Broadcom (AVGO.O) have all opened new tabs that have gained more than 3% apiece. The Philadelphia SE semiconductor index (.SOX), which opens a new tab, increased by 3.4% and got close to its record high set in December 2023.

CEO of Longbow Asset Management Jake Dollarhide said, "AI continues to drive a remarkable surge in this industry, and there's no sign of it slowing down." After BofA Global Research upgraded Apple (AAPL.O) from "neutral" to "buy," the stock jumped 3.3%, driving the S&P 500 information technology index (.SPLRCT) to a new high of 2%.

At 4,780.94 points at the end of the session, the S&P 500 was up 0.88% and was just 0.3% off its all-time high, which was established in January 2022.

Mixed Performance for Dow Jones and Nasdaq

The Dow Jones Industrial Average increased by 0.54% to 37,468.61 points, while the Nasdaq gained 1.35% to 15,055.65 points.

According to data, the number of Americans submitting new applications for unemployment benefits decreased last week to a level last seen in late 2022, indicating strong job expansion in January.

In recent sessions, Wall Street has faltered as investors have grown less confident that the Federal Reserve would start lowering interest rates in March.

Following robust December retail sales figures and after officials downplayed expectations for an early start to rate decreases, the S&P 500 lost ground on Tuesday and Wednesday.

According to the CME Group's FedWatch Tool, traders now anticipate a 56% likelihood of a 25 basis point rate drop in March, down from a possibility above 80% a month ago.

Interest rate-sensitive industries saw declines; the S&P 500 utilities index (.SPLRCU) opened a new tab, losing 1.05% and the real estate index (.SPLRCR) opened a new tab, down 0.6%.

In the event that "convincing" evidence of faster-than-expected inflation declines appears in the upcoming months, Atlanta Federal Reserve President Raphael Bostic indicated he might be willing to lower interest rates earlier than he had previously planned. Bostic has previously stated that he thought rate cuts would be acceptable in 2024's second half.