NEW YORK — Stocks rose on Wall Street Thursday as markets shift their focus back to the U.S. economy.

The S&P 500 rose 0.8% in morning trading and is less than 1% away from its record set in July. The Dow Jones Industrial Average added 262 points, or 0.6%, and is on track to set a record high. The Nasdaq rose 1.3% as of 10:52 a.m. Eastern.

Commerce Department Upgrades Economic Growth Assessment

The Commerce Department upgraded its assessment of U.S. economic growth for the second quarter to 3%, compared to a previous estimate of 2.8%. It’s another signal that the economy remains strong, despite pressure from stubborn inflation and high interest rates.

The market’s gains came despite a drop in Nvidia, which has ridden the frenzy over artificial intelligence to become one of the S&P 500’s most influential companies. Its shares fell 2.5% despite stellar results for the second quarter. The stock, with a total market value topping $3 trillion, is still up 147% in 2024.

Nvidia’s earnings beat and forecast may not have been a big enough surprise for some traders, but surging demand for its artificial intelligence chips show that “it is powering the AI revolution,” said Wedbush Securities analyst Dan Ives, in a note to investors.

“The tech stalwart delivered massive ‘drop the mic’ numbers yet again,” he said.

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Mixed Results for Other Companies

CrowdStrike Holdings jumped 6.1% after the cybersecurity company beat analysts’ second-quarter financial forecasts. The company had a botched software update during its most recent quarter, which triggered a technology meltdown that stranded thousands of people in airports, among other disruptions.

Dollar General slumped 26.7% after cutting its earnings forecast. Best Buy jumped 12.8% after the nation’s largest consumer electronics chain beat Wall Street forecasts, even as sales slipped and it cut guidance for the year.

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Positive Economic Outlook

The mostly solid earnings and economic growth updates are capping off a month of encouraging reports for the broader economy. Data from various reports in August have shown that retail sales, employment and consumer confidence remain strong.

“Solid growth of consumer spending propelled the economy forward in the second quarter, and the increase of consumer confidence in July suggests it will propel growth in the second half of the year as well,” said Bill Adams, chief economist for Comerica Bank.

The key report this week comes on Friday, when the U.S. government releases its July data on inflation with the PCE, or personal consumption and expenditures report. Economists expect the PCE, which is the Federal Reserve’s preferred measure of inflation, to show that inflation edged up to 2.6% in July from 2.5% in June. It was as high as 7.1% in the middle of 2022.

The solid economic data and easing of inflation have bolstered hopes for the Federal Reserve to achieve what it hopes is a “soft landing” for the economy after raising its benchmark interest rate to a two-decade high. The goal was to slow the economy and tame inflation without causing a recession.

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The central bank has signaled that it intends to start cutting its benchmark interest rate. Traders expect the first cut to happen at the next meeting in September.

Bond yields rose in the Treasury market. The yield on the 10-year Treasury rose to 3.88% from 3.84% late Wednesday.

Markets in Europe were mostly higher and markets in Asia were mixed.