Dow Closes at Record High; Nvidia Falls After Forecast

The Dow notched a record high close Thursday in mixed trading following robust U.S. economic data, while artificial intelligence chipmaker Nvidia dropped after its largely in-line forecast failed to impress investors.

The U.S. economy grew faster than initial estimates due to strong consumer spending, the Commerce Department reported, supporting expectations the U.S. is likely to avoid a recession.

"Downward revisions to inflation accompanying an upward revision to spending builds the case for a soft landing," said Jeffrey Roach, chief economist for LPL Financial.

Nvidia's quarterly revenue forecast late on Wednesday disappointed investors accustomed to the chipmaker beating expectations by massive margins in recent quarters.

Nvidia's stock fell, trimming its 2024 gain to around 140%.

Other AI-related stocks were mixed. Microsoft gained, while Google-owner Alphabet dipped.

Broadcom and Advanced Micro Devices also slid for much of the session.

"It's too early to put the bear suit on for AI related companies. We think there's still more upside," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "We see the AI revolution still in the relatively early innings and that bodes well for tech names."

Apple rose after Citigroup named the iPhone maker its top AI pick.

Apple and Nvidia are in talks to invest in OpenAI as part of a new fundraising round that could value the ChatGPT maker above $100 billion, according to media reports.

The Dow Jones Industrial Average closed at its highest level ever, while S&P 500 index was just below its July record high close as expectations for a September interest rate cut remained robust.

According to preliminary data, the S&P 500 gained 0.37 points, or 0.01%, to end at 5,592.55 points, while the Nasdaq Composite lost 37.51 points, or 0.21%, to 17,518.51. The Dow Jones Industrial Average rose 247.74 points, or 0.60%, to 41,336.56.

A Labor Department report showed marginally lower-than-expected jobless claims for the previous week.

The July Personal Consumption Expenditures report, due on Friday, could offer hints on the central bank's monetary policy easing trajectory.

CrowdStrike gained after the cybersecurity company beat quarterly revenue estimates, while Dollar General slumped after slashing its annual sales and profit forecasts.