NEW YORK: The S&P 500 and the Nasdaq closed higher on Monday (Aug 14) as shares of chipmaker Nvidia surged following a bullish note from Morgan Stanley, leading gains in other megacap growth stocks.
Nvidia jumped 7.1%, its biggest single-day increase since May 25, when its 24% surge on a stellar revenue forecast pointed to the game-changing potential of artificial intelligence (AI).
The rally in the chipmaker’s stock pushed the information technology index 1.85% higher, making it the strongest of 11 S&P 500 sector indices.
Other megacap growth stocks rose, including Alphabet, up 1.4% and Amazon.com, up 1.6%. Chipmaker Micron Technology ended with a 6.1% gain.
The Dow Jones Industrial Average rose 26.23 points, or 0.07%, to 35,307.63, the S&P 500 gained 25.67 points, or 0.58%, to 4,489.72 and the Nasdaq Composite added 143.48 points, or 1.05%, to 13,788.33.
“It’s the first day in a while that tech has really significantly outperformed,” said Jay Hatfield, CEO of Infrastructure Capital Advisors here.
“That’s indicative of the fact that you have this blockbuster Nvidia report coming up and that could support the tech market pretty substantially.”
Nvidia, one of several tech companies rallying this year on optimism about AI, is due to report quarterly results next week.
“Nvidia remains our top pick, with a backdrop of the massive shift in spending towards AI, and a fairly exceptional supply-demand imbalance that should persist for the next several quarters,” Morgan Stanley analysts said in a note on Monday.
United States Steel surged 36.8% after announcing that it received an unsolicited bid from Cleveland-Cliffs to acquire the company.
US Steel has begun “a comprehensive and thorough review of strategic alternatives” after “receiving multiple unsolicited proposals” from prospective buyers of the company or some assets, said chief executive David Burritt.
Tesla fell 1.2% after the electric automaker said it had cut prices in China for some Model Y versions.
Market focus this week will be on quarterly earnings from major US retailers including Walmart and Target .
Expected economic data includes retail sales for July that will shape expectations for the direction for US interest rates.
Traders see a nearly 89% chance that the Fed will keep its interest rates unchanged next month, according to CME Group’s Fedwatch tool.
Goldman Sachs’ latest report said its baseline forecast calls for the Fed to start cutting the funds rate in the second quarter of 2024.
Keeping a lid on global market sentiment, investors remained concerned about China’s highly leveraged property sector after the country’s top private property developer, Country Garden, sought to delay payment on a private onshore bond for the first time.
“US stocks are rebounding as some traders decide to buy the two-week dip despite rising fears over China’s property market,” said Oanda’s Edward Moya.
PayPal Holdings rose 2.8% after the company named Alex Chriss, a top executive at tax-preparation software firm Intuit, as its new chief executive officer. – Reuters, AFP