Written by Sinead Karoo and Bhansali Mayur Kamdar
(Reuters) – Gains in large growth stocks such as Alphabet and Tesla supported a rebound in the technology-heavy Nasdaq, leading to a sharp rise in Wall Street on Monday as investors also awaited this week's U.S. Federal Reserve meeting. Major indexes rose.
Growth stocks outperformed, with Alphabet rising 4.8% following media reports that Apple is in talks to put Google's Gemini AI engine in iPhones.
That boosted the communications services sector, which led gains among 11 major S&P 500 sectors and rose 2.9% after earlier hitting its highest since September 2021.
Tesla rose 6.4% after it announced on March 22 that it would raise the price of its Model Y EV by about 2,000 euros ($2,177) in local currencies in some European countries.
Trading was choppy for artificial intelligence powerhouse Nvidia as its annual developer conference begins, with investors waiting for CEO Jensen Huang to announce new chips after the market close. The stock ended the day up 1% after rising as much as 5% at the beginning of the day.
The Philadelphia Semiconductor Index also narrowed its gains, ending up 0.6% higher. The S&P 500 technology stock index rose 1%.
“Tech, semi, everything is a little overcooked,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in Charlotte, North Carolina. “When something is priced perfectly, “The next step is usually consolidation or some kind of disappointment.”
As of 2:27 p.m., the Dow Jones Industrial Average rose 164.61 points, or 0.43%, to 38,879.38, the S&P 500 rose 45.90 points, or 0.90%, to 5,162.99, and the Nasdaq Composite Index rose 197.72 points, or 1.24%. The total amount was 16,170.89.
Investors were also gearing up for the Fed meeting, hoping for clues about the first rate cut. Better-than-expected inflation data is prompting traders to reconsider when and how much rate cuts they will cut this year, according to the CME FedWatch tool, with traders looking ahead to a June rate cut from just a week ago. I am withdrawing my bet on.
Goldman Sachs said on Monday that it now expects to cut interest rates three times in 2024, up from four as originally expected, after inflation was slightly stronger than expected.
If the Fed takes a hawkish stance at the end of Wednesday's policy meeting, it could put pressure on stocks.
“The fact that we are up today provides an opportunity for investors to book profits ahead of the Fed, which is more likely to disappoint than support the recent rally in risk assets.Investors are data-bound, and the data suggests there is little need to ease policy,'' Samana said.
Exchange operator Nasdaq said it has resolved issues related to connectivity and stock orders that affected early trading for more than two hours on Monday.
Xpeng's U.S.-listed shares rose 2.4% on the company's plans to launch a cheaper EV brand amid fierce price competition.
Boeing fell 1.3% following media reports that a federal grand jury in Seattle has issued a subpoena to the company over the Jan. 5 mid-air explosion of a Boeing door plug on an Alaska Airlines flight.
Super Micro Computers, which joined the S&P 500 on Monday, gave up earlier gains and fell 6.6%. But the stock is still up about 245% year-to-date, with bets that it will benefit from AI driving the stock higher.
Advancing issues outnumbered declining issues on the New York Stock Exchange by a 1.49-to-1 ratio, with 197 new highs and 47 new lows.
On the Nasdaq, advancing issues outnumbered declining issues by a ratio of approximately 1.16 to 1, resulting in 2,249 advancing issues and 1,947 declining issues.
The S&P 500 posted 39 new highs and no new lows in 52 weeks. Meanwhile, the Nasdaq recorded 91 new highs and 109 new lows.
(Reporting by Sinead Kalu in New York, Bhansali Mayur Kamdar and Shashwat Chauhan in Bengaluru; Editing by Pooja Desai, Maju Samuel and Aurora Ellis)
