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Nasdaq breaks record, S&P rises with Nvidia results in focus
By Chuck Mikolajczak
NEW YORK (Reuters) – The Nasdaq closed at a record high on Monday, while the S&P 500 rose slightly, as technology stocks rose ahead of Nvidia’s highly anticipated earnings and investors assessed the timing of a rate cut interest rates by the Federal Reserve.
The S&P 500 technology index led gains among the 11 major S&P sectors, rising 1.32%, helped by chipmakers such as Nvidia, which rose 2.49% ahead of its quarterly results on Wednesday.
Investors will look to Nvidia’s earnings for evidence that the AI chip leader can maintain its explosive growth and stay ahead of rivals.
At least three brokerages raised their Nvidia price targets, while peer Micron Technology rose 2.96% after Morgan Stanley upgraded the memory chip maker from “underweight” to “equal weight.” The PHLX semiconductor index rose 2.15%.
“If they surprise on the upside, Nvidia could spark a little fury, although it’s all kind of expensive, so it’s hard to see much of a breakthrough there,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
“If the Fed starts cutting rates, that would actually trigger a recovery, but it doesn’t look like the data supports that yet.”
The Dow Jones Industrial Average fell 196.82 points, or 0.49%, to 39,806.77. The S&P 500 gained 4.86 points, or 0.09%, to 5,308.13 and the Nasdaq Composite rose 108.91 points, or 0.65%, to 16,794.87.
The Dow Jones was pressured by a 4.5% drop in JPMorgan shares after CEO Jamie Dimon said he was “cautiously pessimistic” and said the company would not buy back its shares at current prices.
A solid earnings season and signs that inflation may be starting to cool again have reignited hopes for Fed rate cuts this year, pushing major averages to record levels. The blue-chip Dow closed above 40,000 for the first time last week.
Comments from Fed officials on Monday did little to change expectations for cuts by the central bank, as they were reluctant to say inflationary pressures were easing and several emphasized the need for caution.
The minutes of the Fed’s latest monetary policy meeting are scheduled to be released on Wednesday. Markets are betting on a 63.3% probability of a cut of at least 25 basis points (bps) at the September meeting, CME’s FedWatch tool showed.
The recent rally has started to raise concerns about stock valuations, with the S&P 500 trading at a forward price-to-earnings ratio of 20.8, well above its historical average of 15.9, according to LSEG data.
Deutsche Bank raised its S&P 500 target for year-end 2024 to 5,500 from 5,100, the highest among major brokerages, while Morgan Stanley predicted it would reach 5,400 by June 2025.
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Norwegian Cruise Line rose 7.56% after raising its annual profit forecast.
Advancing issues outnumbered declining ones by a 1.14-to-1 ratio on the NYSE. On the Nasdaq, declining issues outnumbered advancing ones by a ratio of 1.01 to 1.
The S&P 500 recorded 58 new 52-week highs and four new lows, while the Nasdaq recorded 222 new highs and 101 new lows.
Volume on U.S. exchanges was 12.31 billion shares, compared with the full-session average of 11.82 billion over the last 20 trading days.
(Reporting by Chuck Mikolajczak; Editing by Richard Chang)