US close: S&P 500, Nasdaq hit new highs as Nvidia leads tech stocks higher

dl wall street wall st new york city nyc ney york stock exchange nyse nasdaq dow jones industrial average djia trading us usa united states of america 2023120702241 — Sharecast graphic / Josh White

US stocks rose strongly on Wednesday with the S&P 500 and Nasdaq both finishing at new record highs on the back a big surge in the share price of chipmaker Nvidia, which topped a new market cap $3 trillion.

The S&P 500 rose 1.2% to a new high of 5,354.03, while the Nasdaq jumped 2.0% to 17,187.90, with Nvidia rising more than 5% to set a new record high, while stocks across tech sector performed well. The Dow, however, only gained 0.3% to 38,807.33.

Markets were bolstered by a less-than-expected rise in private-sector payrolls in May. According to ADP, job creation was 152,000 – the smaller reading this year – down from April's revised 188,000 increase and versus expectations for a 173,000 jump.

"Stock indices are a sea of green on Wednesday and risk sentiment has improved markedly, as the market weighs up a plethora of bad economic news from the US and what this means for the Fed," said Kathleen Brooks, research director at XTB. "Right now, this means a 62% chance of a first rate cut in the US in September; one week ago there was only a 42% chance that the first rate cut could come in September."

Elsewhere on the macro front, mortgage applications sank by 5.2% in the last week of May, according to the Mortgage Bankers Association, extending the three-month high decline of 5.7% from the previous week.

S&P Global's final reading for its services sector purchasing managers' index for May was unchanged versus a preliminary reading at 54.8, but up from the preliminary print of 51.3.

The ISM's service PMI surged to 53.8 in May, the highest reading in nine months, and well above estimates for a print of 50.8. Economic activity in the services sector rebounded after contracting in April for the first time since December 2022.

In other news, the Bank of Canada became the first of the central banks in the G7 to cut interest rates in the current monetary tightening cycle. As expected, the BoC reduced its benchmark interest rate from 5% to 4.75%.

Nvidia becomes second-largest public stock

Nvidia's big gains saw it overtake Apple to become the second-largest publicly listed stock in the world, with a market cap of $3.01trn. That's ahead of Apple's value of $3.0trn and second only to Microsoft, which is valued at $3.15trn.

Apple, Microsoft and a host of other tech stocks were putting in decent gains on Wednesday, including Amazon, Meta and Alphabet.

Also in the tech sector, Hewlett Packard was up double-digits after surpassing Wall Street expectations on both the top and bottom lines, driven by strong demand for its AI servers.

"Investors continue to seek new ways to play the red-hot AI theme and week after week they are finding more companies that are reaping the benefits of this modern tech revolution," said Dan Coatsworth, investment analyst at AJ Bell. "In Hewlett Packard’s case, it also helps that it is keeping a lid on costs and free cash flow has been better than expected. Bundle up all these pieces of good news and it’s no wonder the shares are on fire."

Elsewhere, cybersecurity firm CrowdStrike traded higher after reporting better-than-expected earnings and issuing strong guidance, while discount retailer Dollar Tree missed on estimates with its latest quarterly earnings and sales performances.

Dow Jones - Risers

Intel Corp. (INTC) $30.78 2.50%
Microsoft Corp. (MSFT) $424.01 1.91%
Goldman Sachs Group Inc. (GS) $461.37 1.40%
Dow Chemical Co. (DOW) $55.76 0.98%
International Business Machines Corporation (CDI) (IBM) $167.10 0.95%
Apple Inc. (AAPL) $195.87 0.78%
Visa Inc. (V) $274.50 0.76%
Walmart Inc. (WMT) $67.12 0.74%
Salesforce.Com Inc. (CRM) $236.53 0.71%
Boeing Co. (BA) $189.85 0.65%