Reuters US Economy
By Johann M Cherian and Sruthi Shankar
(Reuters) -Wall Street's main indexes were mixed on Thursday as investors took stock of economic data that had been delayed by the U.S. government shutdown, while Nvidia's shares tumbled on concerns over intensifying competition in the AI chip space.
Alphabet's shares rose about 1% after the Information reported Facebook-parent Meta Platforms <META.O> was in discussions to use Google's AI chips in its data centers from 2027 and rent chips from Google Cloud by next year.
Nvidia, which currently dominates the AI chips sector, dropped 4.5% to a two-month low, while Advanced Micro Devices fell 7.2%.
The Philadelphia SE Semiconductor index dropped 1.6%, having bounced 4.6% on Monday.
"There's a false expectation that there's only one chip company out there and no one else is working in terms of competition and we've got a headline to remind us that that's just not the case," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management in New York.
The Nasdaq logged its biggest one-day gain in six months on Monday, as investors scooped up tech stocks following several bouts of selling in recent weeks driven by worries of stretched valuations in the sector and high AI spending by large companies.
The S&P 500 and Nasdaq are on course to record their worst monthly performances since March.
At 11:24 a.m. ET, the Dow Jones Industrial Average rose 337.58 points, or 0.74%, to 46,785.85, the S&P 500 gained 12.98 points, or 0.19%, to 6,718.10 and the Nasdaq Composite lost 59.47 points, or 0.25%, to 22,815.15.
DELAYED DATA TRICKLES IN
Commerce Department data showed retail sales fell short of expectations in September, while a separate report showed producer prices rebounded in September due to higher costs of energy goods and tariffs.
Trader bets for an interest rate cut of 25 basis points next month were little changed following the data and were last at an 82.7% chance, doubling from around 40% last week, according to the CME Group's FedWatch Tool.
Market sentiment has recently been supported by growing bets the Federal Reserve will lower borrowing costs in December following dovish remarks by voting members on the Federal Open Market Committee such as John Williams and Christopher Waller.
"Some of the data is suggesting the economy is slowing. It does give the Fed the first piece of data to think about cutting at least," said Blancato.
Meanwhile, the hunt for the next Fed Chair was on, with Treasury Secretary Scott Bessent saying the announcement could come as soon as pre-Christmas.
Eight of the 11 major S&P 500 sectors were higher, with healthcare leading with a 1.7% rise, while the Russell 2000 index tracking small-caps rose 1.5% to a near two-week high.
Retailers got a lift too after department store operator Kohl's jumped 34% and clothing retailer Abercrombie & Fitch surged 30%, with both companies raising their annual earnings forecasts.
Apparel retailer Burlington Stores tumbled 9.2% after its third-quarter revenue missed estimates.
U.S.-listed shares of Alibaba slipped 1.9%, reversing early gains after the Chinese e-commerce giant beat analysts' estimates for quarterly revenue.
Advancing issues outnumbered decliners by a 2.83-to-1 ratio on the NYSE and by a 1.74-to-1 ratio on the Nasdaq.
The S&P 500 posted 32 new 52-week highs and one new low while the Nasdaq Composite recorded 104 new highs and 62 new lows.
(Reporting by Johann M Cherian, Sruthi Shankar and Purvi Agarwal in Bengaluru; Editing by Krishna Chandra Eluri)
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