Chip stocks rallied on Monday, propelling the Nasdaq and S&P 500 to record highs. Nvidia surged 2.5%, Super Micro Computer, a company that creates AI-optimized servers using Nvidia’s chips, soared nearly 9%. Intel also saw an increase of almost 6%. The Nasdaq hit a record high, while the S&P 500 rose modestly to set a new record as well.
Traders are eagerly awaiting fresh inflation data, commentary from Federal Reserve Chair Jerome Powell, and the start of quarterly earnings season. Concerns over inflation and its impact on interest rates are at the forefront of investors’ minds. Consumer price data set to be released on Thursday and producer price data on Friday will provide insight into the Fed’s approach to tackling inflation. The labor market is a key concern, as investors fear that delaying interest rate cuts could harm job growth and possibly lead to a recession.
Interest Rate Cut Expectations
The possibility of interest rate cuts as early as September has gained traction after the latest nonfarm payrolls report indicated a slowdown in U.S. job growth for June. Traders are now pricing in a greater than 75% chance of a rate cut of at least 25 basis points by September, up from 60% the previous week. Powell’s upcoming testimony before U.S. Senate and House committees will be closely watched for clues on the Fed’s stance.
Citigroup, JPMorgan Chase, and Wells Fargo are set to kick off Wall Street’s second-quarter earnings season on Friday. Analysts predict a 10.1% increase in S&P 500 companies’ aggregate earnings per share for the second quarter, compared to an 8.2% rise in the first quarter. Market watchers will be analyzing the earnings reports for insights into the overall health of the economy.
Market Performance
The S&P 500 edged up 0.06% to 5,570.68 points, the Nasdaq gained 0.20% to 18,389.54 points, and the Dow Jones Industrial Average dipped 0.08% to 39,345.56 points. Among the S&P 500 sector indexes, information technology led the gains with a 0.59% increase, followed by materials with a 0.23% rise. Consumer services saw a decline of nearly 1%, with Meta Platforms experiencing a 1.8% drop.
Paramount Global fell over 3% after announcing a merger with Skydance Media. Planemaker Boeing rose 0.3% after agreeing to plead guilty to a criminal fraud conspiracy charge and pay a fine to resolve a U.S. Justice Department probe into two fatal 737 MAX crashes. Advancing issues outnumbered falling ones within the S&P 500, with the index posting 20 new highs and 7 new lows. The Nasdaq recorded 69 new highs and 90 new lows, showcasing market volatility and uncertainty.
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