The Nasdaq and the S&P 500 rose on Monday, buoyed by megacap stocks as investors awaited Big Tech results, a Federal Reserve policy decision and crucial labor numbers this week.
Nvidia, Alphabet, Amazon.com and Meta Platforms were up between 0.6% and 1.5% following the recent rout in megacap tech shares, which saw the main stock indexes spiral downward last week.
At 9:51 a.m. ET, the Dow Jones Industrial Average was down 140.72 points, or 0.35%, at 40,448.62, the S&P 500 was up 11.18 points, or 0.20%, at 5,470.28, and the Nasdaq Composite was up 116.46 points, or 0.67%, at 17,474.34.
The S&P 500 Consumer Discretionary index led sectoral gains with a 0.9% rise, boosted by a 4.4% jump in Tesla’s shares after Morgan Stanley added the EV maker’s stock to its U.S. autos list as a “top pick”.
The three major U.S. stock indexes jumped more than 1% on Friday after hopes of an early start to monetary policy easing were boosted by an encouraging U.S. 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.
Wall St Week Ahead-Spooked US stock market faces tech earnings minefield
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% 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%, according to the CME’s FedWatch. Any hawkish commentary could put equities under renewed selling pressure.
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