The Nasdaq closed at a record high on Monday, while the S&P 500 posted modest gains as technology stocks advanced ahead of Nvidia’s highly anticipated earnings report. Investors are also closely watching for indications of an interest rate cut by the Federal Reserve.
The S&P 500 technology index led the gains among the 11 major S&P sectors, rising 1.32%, driven by chipmakers like Nvidia, which climbed 2.49% in anticipation of its quarterly results on Wednesday. Nvidia’s performance is being scrutinized for signs that the AI chip leader can sustain its rapid growth and outpace competitors.
At least three brokerages raised their price targets for Nvidia, while Micron Technology saw a 2.96% increase after Morgan Stanley upgraded the memory chipmaker to “equal-weight” from “underweight.” The PHLX semiconductor index rose 2.15%.
Stephen Massocca, senior vice president at Wedbush Securities in San Francisco, commented, “If Nvidia surprises to the upside, it could spark a mini-rally. However, given the current valuations, a substantial move up seems unlikely.”
The Dow Jones Industrial Average fell by 196.82 points, or 0.49%, to 39,806.77, while the S&P 500 gained 4.86 points, or 0.09%, to 5,308.13. The Nasdaq Composite rose 108.91 points, or 0.65%, to 16,794.87.
The Dow was pressured by a 4.5% drop in JPMorgan shares after CEO Jamie Dimon expressed “cautiously pessimistic” views and announced the company would not repurchase its stock at current prices.
A robust earnings season and signs of cooling inflation have fueled hopes for Fed rate cuts this year, driving major indices to record levels. The blue-chip Dow surpassed 40,000 points for the first time last week.
Despite Fed officials’ comments on Monday, which maintained a cautious stance on inflation, markets are anticipating a rate cut. Minutes from the Fed’s latest monetary policy meeting, set for release on Wednesday, will be closely watched. The CME’s FedWatch Tool shows a 63.3% probability of at least a 25 basis points cut at the September meeting.
The recent market rally has raised concerns about stock valuations, with the S&P 500 trading at a forward price-to-earnings ratio of 20.8, significantly above its historical average of 15.9, according to LSEG data.
Deutsche Bank increased its 2024 year-end S&P 500 target to 5,500 from 5,100, the highest among major brokerages, while Morgan Stanley projected it would reach 5,400 by June 2025.
Norwegian Cruise Line surged 7.56% after raising its annual profit forecast.
On the NYSE, advancing issues outnumbered decliners by a 1.14-to-1 ratio, while on the Nasdaq, decliners slightly outnumbered advancers by a 1.01-to-1 ratio.
The S&P 500 recorded 58 new 52-week highs and four new lows, while the Nasdaq registered 222 new highs and 101 new lows.
Trading volume on U.S. exchanges was 12.31 billion shares, compared to the 11.82 billion average over the past 20 trading days.