Wall St resumes normal service as Nasdaq rallies; space stocks flying

Stocks on Wall Street returned to the green side of the ledger with the tech-heavy Nasdaq Composite rallying as Advanced Micro Devices continued its march higher following its multi-billion-dollar supply deal with OpenAI, while chip giant Nvidia snapped a three-day decline as chief executive Jensen Huang said computing demand has grown substantially.

Space stocks including Sharesies favourite Rocket Lab were among those propelling the Nasdaq as the New Zealand-founded firm and AST SpaceMobile signed new deals.

The new generation of meme stocks such as Opendoor Technologies and Plug Power were on the red side of the ledger as Roundhill Investments unveiled a new exchange traded fund backed by the firms championed by retail investors.

Meanwhile, the International Monetary Fund and Bank of England are growing wary of the risks posed by the exuberant appetite for artificial intelligence-backed stocks.

One way

Stocks on Wall Street gained in late trading with the S&P 500 up 0.5% and the tech-heavy Nasdaq Composite rising 0.9%, with chipmakers again at the fore as AMD leading the S&P higher climbing another 10% after Goldman Sachs analysts raised their target price on the company in the wake of its mammoth supply deal with OpenAI.

Nvidia was up 1.9% after chief executive Jensen Huang told CNBC’s Squawk Box that computing demand continues to grow at a rapid pace.

Meanwhile, the AI-fuelled boom in stock markets is making some wary, with the Bank of England noting a risk of correction if optimism about the sector subsides, while the IMF managing director Kristalina Georgieva said the current valuations are reminiscent of the dotcom bubble 25 years ago.

“The tech sector is leading the gains, with investors disregarding warnings of a developing AI bubble,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “This brings memories of ex-Fed chair (Alan) Greenspan warning in late 1996 about the irrational exuberance in the US equity market. He ended up being right, although his warning came more than three years too early.”

Entering orbit

Space companies were among Wall Street’s gainers, with AST SpaceMobile gaining 9.6% in late trading after signing a deal with Verizon to provide space-based connectivity to the telco's customers from 2026, while Rocket Lab was up 4.6% on a new multi-launch contract with Japan’s Institute for Q-shu Pioneers of Space.

Meme stocks such as Opendoor Technologies, Plug Power and QuantumScape Corp were on the red side of the ledger after Roundhill Investments launched an ETF focused on the new generation of retail investor favourites.

Bitcoin climbed 2% to US$124,103 at 7am in Auckland while gold futures were up 1.7% at US$4,073 an ounce.

Across the Atlantic, stock markets were also stronger with the UK’s FTSE 100 up 0.7%, Germany’s DAX 30 gaining 0.9% and France’s CAC 40 rising 1.1%, with European steelmakers such as ArcelorMittal and Thyssenkrupp rallying after the European Commission proposed slashing import quotas in half.

That upbeat sentiment is set to spill over to the antipodes, with Australian futures pointing to a 0.5% gain for the S&P/ASX 200 index when trading opens across the Tasman, while New Zealand’s S&P/NZX 50 index starts the day 0.6%, or 75 points, below its all-time high in January 2021.

The kiwi dollar regained some of yesterday’s losses from the Reserve Bank’s outsized half-percentage point cut to the official cash rate, trading at 57.76 US cents at 7am in Auckland from 57.48 cents yesterday.

Economists expect New Zealand’s central bank will cut again at its November meeting, with market pricing indicating an outside chance of a further reduction once Anna Breman takes up the governor’s role in December.

Reporting by Paul McBeth. Image from Nguyen Dang Hoang Nhu on Unsplash.