Chip makers tied to the AI-frenzy rose across the board. Advanced Micro Devices gained 11%. American depositary receipts for
Taiwan Semiconductor Manufacturing
—which manufactures Nvidia chips—added 12%. That was its largest one-day percentage increase since 2008.

While shares of information-technology firms shot 4.5% higher—the sector’s biggest one-day pop since November—none of the 10 remaining sectors in the S&P 500 gained more than a half percentage point. The benchmark index still managed to rise 0.9%, though the Dow industrials slipped 35 points, or 0.1%. Thursday marked the Dow’s fifth consecutive session of losses.

A slate of economic data showed U.S. economic growth and inflation remain hot, adding to fears of persistently tight monetary policy from the Federal Reserve.

Gross domestic product, personal consumption, and Core PCE—the Fed’s preferred inflation gauge—all came in hotter than expected for the first quarter. Jobless claims increased slightly last week, but remained at historic lows.

Bond yields climbed higher as prices fell. The yield on the benchmark 10-year U.S. Treasury note rose to 3.814%, from 3.717% Wednesday. The two-year yield rose to 4.508% from 4.343%.

The looming U.S. debt-ceiling deadline has already rattled short-term bonds, and is starting to cause worry among investors in other corners of the market. On Wednesday, Fitch placed the U.S.’s triple-A credit rating on “negative watch,” citing “increased political partisanship” around the debt limit.

Shares of energy, healthcare and utilities firms all fell more than 1% on the day. Brent crude oil’s 2.7% retreat to $76.26, after settling at its highest value since the start of May on Wednesday, dragged down oil and gas stocks. 

Policy makers and analysts are warning of a market calamity should the limit not be raised in time. That said, stock benchmarks have largely shrugged off the risk.

Marko Papic,
chief strategist at the Clocktower Group, said markets are trading in line with how negotiations have unfolded.

“I’m pleasantly surprised with how well negotiations have gone, and how well the market has taken it,” he said. “But I’m still cautious.” 

Consumers are less concerned about the debt ceiling than in 2011, causing investors to see less risk of politicians taking hardline stances, Papic said. That has reduced the severity of potential fiscal cuts, he added, helping stocks trend higher even as the government nears the date by which it may be unable to pay its bills on time.

Write to Eric Wallerstein at [email protected]