A rally in chip stocks lifted the Nasdaq and S&P 500 to record highs on Monday as investors awaited fresh inflation data, commentary from Federal Reserve Chair Jerome Powell and the start of quarterly earnings season. This surge was led by companies such as Nvidia (NASDAQ:NVDA), Super Micro Computer (NASDAQ:SMCI), and Intel (NASDAQ:INTC). The market is eagerly anticipating the upcoming consumer price data and producer price data to gauge the Fed’s progress in fighting inflation.
The Influence of Fed’s Commentary and Earnings Season
Investors are anxiously awaiting Powell’s semiannual testimony before U.S. Senate and House committees on Tuesday and Wednesday. The hope is to hear a dovish tone from Powell, acknowledging the risks facing the economy. Expectations for interest-rate cuts have grown after the recent nonfarm payrolls report showed a slowdown in job growth, pointing to potential weakness in labor market conditions. Traders are now predicting a greater than 75% chance of a rate cut by September.
Furthermore, companies like Citigroup, JPMorgan Chase (NYSE:JPM), and Wells Fargo are set to kick off Wall Street’s second-quarter earnings season. Analysts are optimistic about the earnings reports, with estimates suggesting a 10.1% increase in aggregate earnings per share for S&P 500 companies in the second quarter. This is an improvement from an 8.2% increase in the first quarter.
Market Performance and Sector Analysis
The S&P 500 was last up 0.06% at 5,570.68 points, with the Nasdaq gaining 0.20% to 18,389.54 points. However, the Dow Jones Industrial Average was down 0.08% at 39,345.56 points. Among the 11 S&P 500 sector indexes, information technology led the gains with a 0.59% increase, followed by a 0.23% rise in materials.
Meanwhile, consumer services fell almost 1%, with Meta Platforms (NASDAQ:META) experiencing a 1.8% decline. Paramount Global also fell more than 3% after agreeing to merge with Skydance Media, highlighting the volatility in the market. Planemaker Boeing (NYSE:BA) saw a modest gain of 0.3% after agreeing to plead guilty to a criminal fraud conspiracy charge.
The performance of chip stocks and the upcoming economic data will continue to impact the market in the coming days. Investors will closely monitor Powell’s testimony and the start of the earnings season for further insights into the state of the economy. The market remains sensitive to news and events that could influence trading decisions and stock performance.