Stocks Soar on Economic Optimism and Chip Sector Surge

US stocks rallied on Thursday, with the S&P 500 reaching a new intraday record high, as investors welcomed a slew of positive economic data and upbeat earnings from the semiconductor industry. The Dow Jones Industrial Average and Nasdaq Composite also posted solid gains, driven by strong performance in the tech and chip sectors.

Powering Ahead: Stocks Surge on Economic Resilience and Chip Sector Strength

Robust Economic Growth and Falling Jobless Claims Fuel Optimism

The US economy grew at a faster-than-expected pace in the second quarter, with GDP rising 3% year-over-year, beating Wall Street's estimates. This solid economic performance, coupled with a surprise drop in weekly jobless claims to the lowest level in four months, bolstered investor confidence and fueled the market's upward momentum.The latest GDP data confirms that the US economy has maintained its resilience, shrugging off concerns about a potential slowdown. The 3% growth rate represents a significant improvement from the 1.4% expansion seen in the first quarter, underscoring the economy's ability to withstand various headwinds.Furthermore, the decline in weekly unemployment claims to 218,000, below the expected 223,000, suggests the labor market remains robust, providing further evidence of the economy's strength. This positive data has reinforced the view that the Federal Reserve may have room to continue its policy of gradual interest rate hikes, without risking a sharp economic slowdown.

Chip Stocks Surge on Micron's Upbeat Earnings and AI Demand

The technology and semiconductor sectors were the standout performers on Thursday, with the Nasdaq Composite leading the broader market's gains. This rally was largely driven by a strong earnings report from Micron Technology (MU), a major supplier of memory chips used in data centers and AI applications.Micron lifted its revenue forecast for the next quarter, citing robust demand for its memory chips from the booming AI sector. This news sent Micron's shares soaring, and the positive sentiment spilled over to other chip stocks, including industry heavyweights Nvidia (NVDA), AMD (AMD), ASML (ASML), and STMicroelectronics (STM).The surge in chip stocks reflects the growing importance of AI and data centers in driving technology innovation and investment. As the demand for powerful computing power and data storage continues to rise, semiconductor manufacturers like Micron are poised to benefit from this trend, fueling the broader rally in the chip sector.

China's Stimulus Pledges and Fed Rate Cut Expectations Bolster Optimism

Investors were also buoyed by news from China, where top leaders signaled a renewed commitment to reviving the country's sluggish economy. China pledged to increase fiscal spending, address the property crisis, and support the stock market, which sent the CSI 300 index on track for its best weekly performance in a decade.The prospect of China's stimulus measures, coupled with growing expectations for another jumbo interest rate cut from the Federal Reserve, further contributed to the upbeat sentiment in the US markets. Traders are now pricing in a 60% chance of a 0.5% rate cut at the Fed's November meeting, up from 40% a week ago.The anticipation of a more dovish stance from the Fed, combined with China's efforts to bolster its economy, has raised hopes that the global economic outlook may be improving, providing a tailwind for US stocks. Investors are eagerly awaiting the upcoming comments from Fed Chair Jerome Powell and the release of the PCE inflation data, which will help shape the central bank's policy decisions and their impact on the markets.Overall, the confluence of strong economic data, robust chip sector performance, and the potential for further policy support from China and the Fed have created a favorable environment for US stocks, setting the stage for fresh record highs in the near future.