July 10, 2024 – 7:26 AM PDT
(Reuters) – The Nasdaq and the S&P 500 hit record highs on Wednesday as strength in Nvidia and other mega stocks supported Wall Street’s winning streak, which will be tested by key inflation data and second-quarter earnings later this week.
Nvidia (NVDA.O) jumped 1.3% to hit a nearly three-week high while Micron Technology (MU.O), Advanced Micro Devices (AMD.O) and ON Semiconductor (ON.O) rose about 1%, propelling the SE Semiconductor index (.SOX) to a record high.
U.S.-listed shares of Taiwan Semiconductor Manufacturing Co climbed 2.5% after the world’s largest contract chipmaker posted a second-quarter revenue beat.
Of the so-called “Magnificent Seven” stocks, Alphabet (GOOGL.O) and Microsoft (MSFT.O) rose 1% and 0.5%, respectively. Apple (AAPL.O) also climbed 1%, to touch a record high, as U.S. Treasury yields slipped.
The S&P 500 Tech Index (.SPLRCT) topped sectoral gainers, while Energy (.SPNY) was the worst hit.
With just a handful of large-cap stocks supporting Wall Street’s banner rally this year, participants wonder when other sections of the market will catch up, leading some to call for greater diversification.
The S&P 500 and the Nasdaq notched their fifth straight intraday record highs after hopes for an interest-rate cut in September received a boost from Jerome Powell, who said the U.S. was “no longer an overheated economy”.
While Powell refrained from committing to a timeline for rate cuts in his testimony to Congress on Tuesday, he is now slated to appear before the House Financial Services Committee for further questioning from lawmakers.
“Powell came in a little bit more dovish than we expected… he’s purposely trying to signal to markets that if there is a good inflation print this week, September is back on the table as a possibility for a rate cut,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Bets on a 25-basis-point rate cut by September ticked up to 74%, up from around 70% on Tuesday and 45% a month ago, according to CME’s FedWatch. Comments from Fed officials Austan Goolsbee, Michelle Bowman and Lisa Cook are also expected through the day.
The focus will now shift to inflation data this week, with the Consumer Price Index due on Thursday and the Producer Price Index report on Friday.
The second-quarter earnings season, which kicks off this week with major banks reporting on Friday, will be a key test for whether high-flying megacaps can justify expensive valuations and continue their strong runs.
At 9:53 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 17.83 points, or 0.05%, at 39,309.80, the S&P 500 (.SPX) was up 14.12 points, or 0.25%, at 5,591.10, and the Nasdaq Composite (.IXIC) was up 87.84 points, or 0.48%, at 18,517.13.
TurboTax parent Intuit (INTU.O), which plans to lay off about 10% of its workforce, lost 2.8%.
Gene-sequencing equipment maker Illumina (ILMN.O) jumped 2.6% on plans to acquire privately held Fluent BioSciences.
Advancing issues outnumbered decliners by a 2.46-to-1 ratio on the NYSE, and by a 1.67-to-1 ratio on the Nasdaq.
The S&P index recorded 17 new 52-week highs and six new lows, while the Nasdaq recorded 25 new highs and 50 new lows.
Reporting by Lisa Mattackal and Ankika Biswas in Bengaluru; Editing by Pooja Desai
