Indexes end sharply higher; AI chip maker Nvidia up ahead of results

By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks ended sharply higher on Wednesday as shares of Nvidia (NASDAQ:) gained ahead of quarterly results from the company whose chips are widely used for artificial intelligence (AI) computing.

Investors expect that another strong outlook from Nvidia could fuel a further rally in tech stocks. It is due to report after the closing bell.

Shares of Nvidia rose ahead of the report, adding to recent gains. Its stock is up more than 220% for the year so far.

Adding to Wall Street’s upbeat mood, the yield on the 10-year U.S. Treasury note eased from near 16-year highs after weak business activity data from the United States and the euro zone.

“What’s troubled this market has been the persistent rise in rates at the longer end,” said Rick Meckler, partner, Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

U.S. Federal Reserve Chair Jerome Powell’s comments on Friday at the Jackson Hole conference will be scrutinized for clues on the U.S. central bank’s interest rate path.

According to preliminary data, the S&P 500 gained 48.84 points, or 1.11%, to end at 4,436.39 points, while the Nasdaq Composite gained 215.16 points, or 1.59%, to 13,721.03. The Dow Jones Industrial Average rose 188.50 points, or 0.55%, to 34,477.33.

Nvidia’s report and comments will be key to the broad market, Meckler said.

“Not just their numbers, but what they say in the conference call about what’s happening in AI is going to have a big impact on market sentiment,” he said.

Nvidia is part of the so-called Magnificent Seven group of megacap stocks including Apple (NASDAQ:) and Tesla (NASDAQ:) that have powered the ‘s sharp gains this year, and investors fear a selloff if the company fails to meet expectations.

According to strategists in a Reuters poll, the S&P 500 will eke out only marginal gains between now and year end, after its strong move up already this year. The index was forecast to end the year at 4,496.

Shares of drugmakers Gilead Sciences (NASDAQ:) and Merck & Co advanced after Swiss rival Roche inadvertently published positive lung cancer drug trial data.