S&P 500 in rally mode as Nvidia explosion guidance sparks tech meltdown

Investing.com — The S&P 500 rallied on Thursday as a technology surge led by Nvidia and progress in debt ceiling talks fueled bullish bets on stocks.

It rose 0.9%, fell 0.1%, or 35 points, gained 1.8%.

NVIDIA (NASDAQ:) surged 27%, taking its market capitalization to $956.52 billion and within reach of $1 trillion, after reporting a better-than-expected first quarter and guidance that markedly beat estimates of Wall Street.

The chipmaker said it expected second-quarter revenue of around $11 billion, well above analyst expectations of $7 billion, as the growing need for artificial intelligence bolsters the demand outlook for chips in its data center business.

“[O]Our expectations for NVDA’s future revenue are rising substantially with our revised FY2026 forecast now estimating $67 billion in sales (nearly 50% higher than our previous outlook of $45 billion),” Wedbush said in a note after upgrading its rating on the stock to Outperform from Neutral, with a $490 price target, up from $290.

The record rise in Nvidia, led monolithic power Systems (NASDAQ:), which provides power management solutions for some of Nvidia’s chips, rose 16%, while Taiwan Semiconductor Manufacturing (NYSE:) and Advanced Micro Devices (NASDAQ:) also rose sharply.

Stock sentiment was also boosted by signs that President Joe Biden and Republican Kevin McCarthy are close to reaching an agreement to raise the debt ceiling needed to avoid a US default.

Treasury Secretary Janet Yellen previously warned that the US could default on its debt as of June 1. Ahead of the so-called date X, or the day the US will be unable to pay its bills, credit ratings agency Fitch put US creditworthiness on alert amid concerns about a possible default.

On the earnings front, retailers were in the spotlight as Best Buy Co Inc (NYSE:) and Ralph Lauren (NYSE:) reported quarterly earnings that beat Wall Street estimates.

Dollar Tree (NASDAQ:), however, fell 10% after its second-quarter earnings estimates from Wall Street, as falling margins weighed on the bottom line.

Gross margin year-over-year decreased 343 basis points, driven by “lower initial margin, a mix shift toward consumables and higher shrinkage, partially offset by lower freight costs.” Goldman Sachs said in a note.

On the economic front, an upward revision to the US economy in the first quarter and a less-than-expected opening week pointing to a stronger economy dented expectations of a rate pause next month.

Following the data, the odds of a June rise rose to 50% from 28% the day before, according to Investing.com.

Fed interest rate tracking tool.

In other news, DISH Network Corporation (NASDAQ:) rose nearly 8% as the company is reportedly in talks with Amazon (NASDAQ:) to sell wireless phone plan services through the e-commerce platform, the Wall Street Journal reported. .