Dow Soars to One-Month High on Investor Portfolio Shift

262

Despite the broader market’s mixed performance, with the S&P 500 and Nasdaq slipping due to profit-taking in technology shares that have driven much of this year’s market gains, nine out of eleven major S&P sectors saw gains.

Nvidia led the declines, dropping 6.68% over three sessions amid profit-taking following its recent rapid ascent to become the world’s most valuable company. Other semiconductor stocks like Taiwan Semiconductor Manufacturing, Broadcom, Marvell Technology, and Qualcomm also fell between 3.53% and 5.7%, dragging down the semiconductor index by 3.02%.

Investors showed a preference for value-oriented sectors such as financials, energy, and utilities, with energy stocks benefiting additionally from rising oil prices driven by stronger fuel demand expectations. The Dow Jones Industrial Average extended its gains for the fifth consecutive session, while the small-cap Russell 2000 index hit its highest level in over a week, indicating broader market strength.

Except for the tech and consumer discretionary sectors, which declined, energy emerged as the top performer, rising 2.73%. Market sentiment remained cautiously optimistic ahead of Friday’s release of the personal consumption expenditures (PCE) price index, the Fed’s preferred gauge of inflation, which is expected to show a moderation in price pressures.

Investors are still pricing in about two rate cuts this year, with a 61% chance of a 25-basis-point cut in September according to LSEG’s FedWatch, despite San Francisco Fed President Mary Daly’s caution against premature rate cuts before achieving sustained inflation close to 2%.

Closing figures for Monday showed the S&P 500 down 0.29% at 5,448.89 points, and the Nasdaq Composite slipping 1.09% to 17,499.17. Meanwhile, the Dow rose 0.66% to 39,408.32 points. Additional market highlights this week include data on durable goods, weekly jobless claims, final first-quarter GDP figures, the annual Russell index reconstitution, and various quarterly earnings reports.

Noteworthy stock movements included Meta Platforms rising on reports of potential integration of its AI model with Apple’s new AI system for iPhones, while RXO surged on its plans to acquire United Parcel Service’s Coyote Logistics unit for $1.025 billion.

Advancing issues outnumbered decliners by a ratio of 2.25-to-1 on the NYSE, with 179 new highs and 48 new lows. The S&P 500 recorded 35 new 52-week highs and one new low, while the Nasdaq Composite logged 49 new highs and 128 new lows. Trading volume on U.S. exchanges totaled 10.94 billion shares, slightly below the 20-day average.

The week ahead also includes a presidential debate between President Joe Biden and Republican rival Donald Trump, adding a political dimension to market sentiment as the November election approaches.