Wall Street climbed to fresh records on Thursday, with the S&P 500 and Nasdaq Composite both reaching new intraday highs. The rally was fueled by strong performances from Nvidia (NVDA) and Cisco (CSCO), as investors continued to pile into artificial intelligence plays despite a backdrop of persistent inflation and mixed economic data.
Market Movers
Nvidia shares advanced after Reuters reported that the U.S. has authorized about 10 Chinese companies—including Alibaba (BABA), Tencent, ByteDance, and JD.com (JD)—to purchase its H200 AI chip. Although no shipments have yet been made, the news buoyed sentiment around AI demand. Cisco stood out with a surge to an all-time high after raising its annual revenue forecast. The networking giant disclosed $5.3 billion in AI infrastructure orders from hyperscalers and boosted its full-year order target from $5 billion to $9 billion.
Economic Data
April retail and food-services sales rose 0.5% to $757.1 billion, according to the Census Bureau, though the figure is not adjusted for inflation. March's increase was revised down to 1.6%. Meanwhile, initial jobless claims for the week ended May 9 climbed by 12,000 to 211,000, with continued claims rising to 1.782 million. The labor market remains tight, but the data do not suggest significant weakness.
Inflation and Fed Outlook
Inflation remains a key concern. The producer price index rose 1.4% in April and jumped 6.0% from a year ago—the largest annual gain since December 2022. Consumer prices increased 3.8% over the past year through April. Despite these figures, rate-cut expectations remain low. Kalshi and Polymarket both show a roughly 97% probability that the Federal Reserve will hold rates steady at its June meeting.
Sector Performance
Technology led the gains, with nine of the S&P 500's 11 sectors moving higher. On both the NYSE and Nasdaq, advancing issues outnumbered decliners. The rally underscores investors' conviction in AI-driven growth, even as inflation data suggest the Fed may not ease policy anytime soon.
Risks Ahead
Analysts caution that the market's reliance on AI earnings carries risks. A spike in oil-driven inflation or delays in Nvidia's China chip approvals could undermine support for rate-sensitive tech names. Chris McGuire of the Council on Foreign Relations warned that further Nvidia chip sales to China could narrow the U.S. lead in AI. For now, however, the AI trade continues to attract capital, keeping Wall Street in record territory.
