Nasdaq and S&P 500 Reach Record Highs Amid Strong Tech Gains and Fed Chair Comments

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The Nasdaq and S&P 500 achieved record-high closes, buoyed by significant gains in Nvidia and other major Wall Street stocks. This rally comes ahead of key inflation data and quarterly earnings reports expected later this week.

 Record-Breaking Streak

The Nasdaq marked its seventh consecutive record-high close, while the S&P 500 notched its sixth. The S&P 500 crossed the 5,600 mark for the first time, following comments from Federal Reserve Chair Jerome Powell, which increased expectations for a potential interest rate cut in September.

 Federal Reserve Insights

During his second day of Congressional testimony, Powell indicated he was not yet convinced that inflation was steadily declining to the 2% target, although he expressed “some confidence” that this trend might be emerging.

Tech Sector Boost

The Philadelphia Semiconductor Index surged by 2.4% to reach a record high, driven by strong quarterly revenue reports from Taiwan Semiconductor Manufacturing Co. “TSMC’s report supported the AI narrative, making it a crucial data point for the day,” noted Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta.

Significant tech stocks also saw notable gains:

– Micron Technology  rose by 4%

– Nvidia  increased by 2.7%

– Advanced Micro Devices climbed by 3.9%

– Apple advanced by 1.9% to a record high, raising its market value to $3.6 trillion

Market Performance

The S&P 500 gained 1.02% to close at 5,633.91 points, while the Nasdaq rose by 1.18% to end at 18,647.45 points. The Dow Jones Industrial Average also saw an increase of 1.09%, closing at 39,721.36 points.

For the year 2024, the S&P 500 has increased by 18%, and the Nasdaq has risen by 24%. All 11 S&P 500 sector indexes reported gains, led by a 1.63% rise in information technology and a 1.34% increase in materials.\

 Trading Volume and Investor Sentiment

Trading volume on U.S. exchanges was relatively light, with 10 billion shares traded compared to an average of 11.5 billion over the past 20 sessions. Investor sentiment is being closely watched as the high valuations of a few large-cap stocks have driven the market’s rally this year, raising concerns about a potential selloff if these companies’ earnings do not meet expectations.

Upcoming Economic Data and Earnings Reports

Key inflation data scheduled for this week includes the Consumer Price Index on Thursday and the Producer Price Index on Friday. According to CME’s FedWatch, expectations for a 25-basis-point rate cut by September have increased to 74%, up from around 70% on Tuesday and 45% a month ago.

The second-quarter earnings season kicks off this week, with major banks reporting on Friday. This period will be critical in assessing whether high-performing megacap stocks can justify their expensive valuations and continue their strong performance.

Notable Stock Movements

– Intuit fell by 2.6% after announcing plans to lay off about 10% of its workforce.

– Illumina  surged over 6% following its announcement of acquiring privately held Fluent BioSciences.

Market Breadth

Advancing issues outnumbered decliners within the S&P 500 by a ratio of 4.3-to-one. The S&P 500 posted 33 new highs and 11 new lows, while the Nasdaq recorded 65 new highs and 117 new lows.

In conclusion, the Nasdaq and S&P 500’s record closes highlight strong investor confidence driven by gains in tech stocks and supportive comments from the Federal Reserve Chair. However, upcoming inflation data and quarterly earnings reports will be crucial in determining whether the current rally can be sustained.