Written by Lisa Pauline Mattackal, Carolina Mandl, and Ankika Biswas
(Reuters) -The blue-chip Dow reached a one-month high on Monday due to a widespread surge in the stock market as investors added several laggards to their portfolios and withdrew from AI-related stocks in anticipation of this year’s Federal Reserve interest rate cuts.
Nvidia (NASDAQ: NVDA) fell 5.4% for a third session as investors took advantage of the semiconductor bellwether following its explosive ascent to the top spot in the world’s valuation last week.
The chip stocks index fell 2.3% as a result of losses in other chip stocks, which included American shares of Marvell (NASDAQ: MRVL) Technology, Broadcom (NASDAQ: AVGO), Qualcomm (NASDAQ: QCOM), and Taiwan Semiconductor Manufacturing (NASDAQ: AVGO). These losses ranged from 2.1% to 4%.
“In this case, the market is buying some laggards and selling some winners,” Natixis Investment Managers senior strategist Jack Janasiewicz stated. “It’s a little bit of a nod to looking out over the inflation data that is coming out on Friday, as expectations are for a pretty soft print.”
Out of the 11 S&P 500 sector indices, technology and consumer discretionary were the only two that saw declines. However, the energy industry saw a 2.5% increase.
With an intraday surge of more than 0.5%, the Dow Jones Industrial Average is headed for a five-day winning run. The Russell 2000 small-cap index also reached its highest point in more than a week, indicating increases in the overall market.
“If inflation surprises to the upside, the market may widen considerably… “Everything beyond the AI stocks will become more widely available,” stated Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
The primary focus of investors this week is the release of the personal consumption expenditures (PCE) price index report on Friday. This report is the Fed’s favored gauge of inflation and is anticipated to indicate a slowdown in price pressures.
According to LSEG’s FedWatch, investors are still putting in a 61% chance of a 25 basis point cut in September and are still expecting approximately two rate decreases this year. As per the Fed’s latest projections, there is a possibility of one rate cut in December.
The S&P 500 dropped 6.84 points, or 0.13%, to 5,457.78 at 02:03 p.m., the Nasdaq Composite lost 147.38 points, or 0.83%, to 17,541.98, and the Dow gained 225.94 points, or 0.58%, to 39,376.27.
This week’s other data include the yearly Russell index reconstitution, weekly unemployment claims, final first-quarter GDP figures, and durable goods. It’s also time for a few quarterly earnings reports.
President Joe Biden’s debate with Republican opponent Donald Trump on Thursday in Atlanta could have an impact on the result of a race for the November election that polls indicate is close.
Following news that the parent company of Facebook has talked about incorporating its generative AI model into Apple’s (NASDAQ: AAPL) recently unveiled AI system for iPhones, Meta Platforms (NASDAQ: META) saw a 0.23% increase in value. Apple’s stock increased by 0.77% as well.
With plans to pay $1.025 billion to acquire United Parcel Service’s (NYSE: UPS) Coyote Logistics business unit, RXO surged more than 21%.
On the NYSE, advances outweighed decliners by a ratio of 2.27 to 1. On the NYSE, there were 39 new lows and 141 new highs.
While the Nasdaq Composite registered 41 new highs and 101 new lows, the S&P 500 recorded 33 new 52-week highs and one new low.
