By Yasin Ebrahim
Investing.com — The Dow racked up back-to-back gains Thursday, led by a chip-fueled rally in tech as investors shift attention to monetary policy clues as the Federal Reserve’s Jackson Hole symposium got underway.
The Dow Jones Industrial Average added 0.98%, or 324 points, the Nasdaq was up 1.7%, and the S&P 500 rose 1.4%.
Semiconductor stocks rose more than 3%, supported by NVIDIA Corporation (NASDAQ:NVDA) as Wall Street analysts shrugged off the chipmakers’ weaker-than-expected quarterly results and guidance amid expectations that the soft patch in its gaming business is likely nearing a bottom.
Morgan Stanely said it expected the chipmaker’s gaming business to bottom in the October quarter, leading to “a fairly sharp rebound” in the division “as soon as the January quarter.”
The positive sentiment from Wall Street analysts sparked a jump in other semis including Advanced Micro Devices (NASDAQ:AMD), Micron Technology (NASDAQ:MU) and ON Semiconductor (NASDAQ:ON).
Other tech including cloud stocks were mixed as Salesforce slumped while Snowflake surged.
Salesforce.com (NYSE:CRM) reported quarterly results that topped analysts’ expectations, but softer guidance dragged the stock more than 3% lower.
“Salesforce CEO Benioff said the company is seeing some elongated sales cycles and more scrutiny of deals which the company expects will continue in 2H resulting in a softer outlook,” Wedbush said as it cut its price target on the stock to $215 from $225.
Snowflake (NYSE:SNOW) rallied more than 22% after the cloud data company’s better-than-expected revenue, driven by growing production revenue, offset a wider than expected quarterly loss.
Financials were boosted by rising bank stocks, meanwhile, as economy data further cooled fears about an imminent recession.
Citigroup (NYSE:C), Huntington Bancshares (NASDAQ:HBAN), Principal Financial Group (NASDAQ:PFG) were up more than 1%.
Second-quarter GDP on an annualized basis was revised to a decline of 0.6% from 0.9% decline previously as consumption was also revised higher to 1.5% from 1% previously.
The signs of a stronger consumer come just as the Fed kicked off its annual summit, with Fed chairman Jerome Powell set to deliver fresh clues on monetary policy on Friday.
“My base case scenario is Powell will be a little more hawkish, but I worry he may not be hawkish enough to really tighten the financial condition,” Zhiwei Ren, managing director and portfolio manager at Penn Mutual Asset Management told Investing.com on Thursday.
A less hawkish Fed would not only risk inflation staying higher for longer but also dent short-term Treasury yields, which have recently priced in the prospect of a more hawkish Fed policy.
“If Powell isn’t hawkish enough to meet the market expectation, the front-end of the Treasury yield curve will really come down as traders who are in short positions are forced to cover,” Ren added.