Traders work on the floor of the New York Stock Exchange.
NYSE
Stocks ticked higher on Wednesday as artificial intelligence giant Nvidia recovered some of its losses from the prior session.
The S&P 500 rose 0.2%, while the Nasdaq Composite advanced 0.3%. The Dow Jones Industrial Average climbed 102 points, or 0.2%.
Nvidia gained 0.4%, regaining some of the declines from Tuesday that was dominated by heightened fears about the circular nature of the AI industry, sparked by a partnership between the chipmaker and OpenAI. Nvidia, along with fellow leading AI player Oracle, tumbled that day on worries the advance was running out of steam with the outlook already priced into the shares.
Signaling that confidence in the AI trade is still in question, shares of Micron Technology moved lower by almost 2% as the company’s earnings and forecast weren’t strong enough to impress investors.
The S&P 500 closed in the red on Tuesday, snapping a three-day winning streak, on those AI trade worries. The broad market index had reached a new all-time intraday high earlier in the session and posted a record close on Monday. The Nasdaq Composite also fell, bogged down by Nvidia.
Traders could also be profit-taking amid elevated market valuations, which Federal Reserve Chair Jerome Powell called out at a Tuesday press conference.
Wells Fargo chief equity strategist Ohsung Kwon remains bullish on the AI trade, anticipating that spending will continue to be robust. “I think this is a AI-led bull market, and I think this is likely to continue,” he said Tuesday on CNBC’s “Power Lunch.”
“First of all, it’s not a bubble,” Kwon continued. “The entire outperformance of the Nasdaq since the end of tech bubble has been driven by better fundamentals in the Nasdaq versus the S&P 500, and I think that’s likely to continue. Second, we still think we are in the early innings of the AI investment cycle. … I think the way this plays out is, as long as the equity market continues to reward companies’ capex outlook and the growth outlook, this is likely to continue.”
Traders are cautious before jobless claims data Thursday and PCE inflation data Friday. They’re also watching troubling developments regarding a government shutdown. President Donald Trump cancelled a meeting with Senate Minority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries that could have possibly averted the shutdown before a Sept. 30 deadline.
“That cancellation has led to a fresh bout of concern that funding will run out at next week’s deadline, and we could see the first shutdown since the winter of 2018-19,” wrote Deutsche Bank’s Jim Reid in a note to clients Wednesday morning.