The tech-heavy Nasdaq soared to a new record high on Monday, driven by a surge in chipmakers, as investors eagerly anticipated the highly awaited quarterly results from Nvidia and the release of the Federal Reserve’s policy meeting minutes later in the week. The bullish momentum was further fueled by upbeat corporate earnings and softer-than-expected inflation data, fueling hopes for potential interest rate cuts this year and contributing to the fourth consecutive week of gains for the three major U.S. indexes.
Last week witnessed significant milestones as both the benchmark S&P 500 and the Nasdaq reached all-time highs, while the Dow Jones Industrial Average closed above the coveted 40,000 level on Friday.
Investors are closely eyeing Nvidia’s quarterly results scheduled for Wednesday, seeking evidence of the AI chip leader’s ability to sustain its explosive growth and maintain a competitive edge over its rivals. The outcome of the Fed’s latest monetary policy meeting, also slated for Wednesday, adds to the anticipation as market participants seek insights into the central bank’s stance on potential rate cuts.
Sam Stovall, chief investment strategist at CFRA Research, highlighted the looming question of whether the market’s rapid ascent has been too swift. He emphasized that while a slowdown in Nvidia’s performance may temper its stock’s advance, the broader AI-driven boom is expected to buoy not only Nvidia but also other related stocks.
Nvidia shares surged by 2.8% on Monday, buoyed by at least three brokerages raising the stock’s price target. Similarly, Micron Technology climbed 4% following an upgrade from Morgan Stanley.
Amidst the rally, the information technology sector outperformed other major S&P 500 sectors, driven by the gains in chipmakers.
Market sentiment regarding potential rate cuts received mixed signals from Federal Reserve officials. While Atlanta Fed President Raphael Bostic stressed the need for confidence in achieving the 2% inflation target, Vice Chair For Supervision Michael Barr expressed disappointment over the year’s inflation data so far.
Traders are pricing in a 76.2% chance of at least a 25-basis-point rate cut in September, according to the CME’s FedWatch Tool.
Deutsche Bank raised its year-end S&P 500 target to 5,500 points, citing robust corporate earnings, implying a near 4% upside from the index’s last close.
In terms of economic data, investors are awaiting weekly initial jobless claims, S&P global flash PMI readings, and durable goods data scheduled for release throughout the week.
At 9:57 a.m. ET on Monday, the Dow Jones Industrial Average marginally declined, while the S&P 500 and the Nasdaq Composite posted gains.
Notable stock movements included a 3% rise in Johnson Controls International following reports of activist investor Elliott Investment Management building a significant position in the company. Norwegian Cruise Line surged by 6% after raising its annual profit forecast, with peer Carnival Corp also gaining 4%.
Advancing issues slightly outnumbered decliners on both the NYSE and the Nasdaq.
In summary, the market’s record-breaking run continues, propelled by optimism over earnings, potential rate cuts, and significant developments in key sectors.
