As investor enthusiasm for AI-related trades reignited, US stocks extended their gains on Wednesday, with the tech-heavy Nasdaq 100 Index briefly recouping all losses suffered since the US midterm elections.
As of 11:31 AM New York time, the Nasdaq 100 was up 2.6%, having risen intraday to 28,469.91 points, its highest level since November 4. Previously, the index had been hit hard by concerns that a Democratic sweep of Congress would impact AI infrastructure buildout, weighing on stocks such as NVIDIA (NVDA) and Micron Technology.
Wednesday's rally came as better-than-expected results from CoreWeave, strong demand for Anthropic's initial public offering, and impressive quarterly results from OpenAI jointly rekindled investor appetite for AI trades. The S&P 500 rose 1.2%, while the blue-chip Dow Jones Industrial Average was roughly flat.
Investors aggressively bought tech stocks, temporarily setting aside renewed concerns sparked by higher-than-expected inflation, even as oil prices also ended a two-day losing streak. Accelerating core inflation drove US Treasury yields sharply higher on Tuesday, reinforcing market bets that the Federal Reserve will raise interest rates further and adding pressure on equities. Wednesday marked Veterans Day, and the US Treasury market was closed.
CoreWeave shares surged as much as 25% intraday, on track for their best single-day performance since June. The cloud infrastructure company's revenue beat expectations, and its full-year outlook also exceeded Wall Street forecasts, fueling the stock's rally. These results may help ease market concerns about the long-term sustainability of AI infrastructure growth.
"If CoreWeave can deliver this kind of execution for several consecutive quarters, those concerns will fade," said Brian Mulberry, chief market strategist at Zacks Investment Management, in a note.
Although AI trades have experienced notable volatility recently, strategists do not believe the bull market is over.
"In our view, this correction is 95% complete," said Mike Wilson, chief US equity strategist and chief investment officer at Morgan Stanley, in an interview with Bloomberg Radio. "We are fairly confident that AI infrastructure buildout will continue to advance."
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