Megacaps lift Wall St ahead of Big Tech earnings
The Nasdaq and the S&P 500 have risen, buoyed by megacap stocks as investors awaited Big Tech results, a Federal Reserve policy decision and crucial labour numbers this week.
Nvidia, Alphabet, Amazon.com and Meta Platforms were up between 0.6 per cent and 1.5 per cent following the recent rout in megacap tech shares, which saw the main stock indexes spiral downward last week.
In early trading on Monday, the Dow Jones Industrial Average was down 140.72 points, or 0.35 per cent, at 40,448.62, the S&P 500 was up 11.18 points, or 0.20 per cent, at 5,470.28, and the Nasdaq Composite was up 116.46 points, or 0.67 per cent, at 17,474.34.
The S&P 500 Consumer Discretionary index led sectoral gains with a 0.9 per cent rise, boosted by a 4.4 per cent jump in Tesla’s shares after Morgan Stanley added the EV maker’s stock to its US autos list as a “top pick”.
The three major US stock indexes jumped more than one per cent on Friday after hopes of an early start to monetary policy easing were boosted by an encouraging US inflation report, close on the heels of recent data signaling a loosening jobs market.
However, the S&P 500 and the Nasdaq failed to recoup losses and closed the week lower after a disappointing start to tech earnings prompted the indexes to log their steepest one-day slide since 2022 on Wednesday.
The next test for markets are earnings from Microsoft, Meta, Apple and Amazon.com, starting on Tuesday, which investors will watch to gauge if the AI-led equity rally has room to grow.
Technology behemoths have dominated Wall Street’s record-breaking run, prompting investors to turn their attention to laggards such as mid and small caps.
“This is the correct time (for a rotation) because the Fed is more likely to cut rates, so this time it can be a little more long lasting,” said Art Hogan, chief market strategist at B Riley Wealth.
The Russell 2000 small-cap index was up 0.1 per cent after a three-week winning streak, just shy of levels last seen more than two-and-a-half years ago.
Hopes are pinned on the Fed signaling a rate cut in September in Wednesday’s policy decision, with odds for a 25-basis-point reduction at 89 per cent, according to the CME’s FedWatch. Any hawkish commentary could put equities under renewed selling pressure.
“(Fed Chair) Powell will want to give the market a bit of a hint that their expectations are probably not out of bounds, that September could be the first rate cut,” Hogan said.
A slew of employment reports this week, including the Non-farm Payrolls, will be scrutinised for insight into a somewhat easing labour market.
Crypto stocks such as Coinbase Global, Riot Platforms and Marathon Digital gained between 2.4 per cent and 3.6 per cent after bitcoin prices jumped to a seven-week high.
Abbott Laboratories dropped 4.1 per cent to the bottom of the S&P 500 after a jury ordered it to pay $US495 million ($A755 million) in damages following a trial that found the healthcare company’s formula for premature infants had caused a dangerous illness.
Advancing issues outnumbered decliners by a 1.23-to-1 ratio on the NYSE, and by a 1.09-to-1 ratio on the Nasdaq.
The S&P index recorded 15 new 52-week highs and one new low, while the Nasdaq recorded 73 new highs and 29 new lows.
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