S&P 500, Nasdaq hit record closing highs ahead of data, Fed comments

THE S&P 500 and Nasdaq scored record closing highs on Monday as technology shares rallied on enthusiasm over artificial intelligence ahead of this week’s economic data and Federal Reserve officials’ speeches that could shed light on monetary policy.

Megacaps Apple and Microsoft rebounded from early losses to end 1.97% and 1.31% higher respectively.

Apple shares extended their rally from last week when the company announced new AI features meant to rekindle demand for iPhones.

“This is continuing to be driven by AI,” said J. Bryant Evans, investment advisor and portfolio manager at Cozad Asset Management in Champaign, Illinois.

Broadcom and U.S.-listed shares of Taiwan Semiconductor Manufacturing Co were up 5.41% and 2.74% respectively while Micron Technology rose 4.58% after price-target raises by brokerages.

The Philadelphia SE Semiconductor index hit an all-time high even as artificial intelligence chip leader Nvidia retreated from a record high to lose 0.66%.

Consumer discretionary and technology were the biggest gainers among the 11 S&P 500 sector indexes, while utilities and real estate led declines.

“There is hope that lower interest rates might come into play looking forward, reducing housing costs and helping consumers out,” said Evans.

Goldman Sachs lifted its 2024 year-end target for the S&P 500 Index to 5,600 from 5,200, while Evercore ISI raised its forecast for the benchmark index to 6,000 from 4,750.

Both brokerages cited technology strength and enthusiasm for AI as reasons for their upgrades.

The tech-heavy Nasdaq and S&P 500 hit multiple all-time peaks in the previous week.

The Fed will be able to cut its benchmark interest rate once this year, Philadelphia Fed President Patrick Harker said on Monday, if his economic forecast plays out.

Fed Board Governor Lisa Cook will speak later on Monday.

This week’s economic roster includes May retail sales data on Tuesday, followed by industrial production, housing starts and the S&P flash Purchasing Managers’ Index.

Markets will be closed on Wednesday for the Juneteenth holiday.

The Fed held interest rates steady on Wednesday and pushed out the start of rate cuts to perhaps as late as December.

However, markets still expect about two 25-basis-point cuts this year, LSEG data showed. The CME FedWatch tool shows easing is still seen beginning at the September meeting.

The Dow Jones Industrial Average rose 188.94 points, or 0.49%, to 38,778.10. The S&P 500 climbed 41.63 points, or 0.77%, to 5,473.23 and the Nasdaq Composite advanced 168.14 points, or 0.95%, to 17,857.02.

Autodesk jumped 6.48% after a report that activist investor Starboard Value had bought a roughly $500 million stake in the software maker.

Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE, which had 250 new highs and 126 new lows.

The S&P 500 posted 37 new 52-week highs and six new lows while the Nasdaq Composite recorded 61 new highs and 214 new lows.

Volume on U.S. exchanges was 11.12 billion shares, compared with the 11.87 billion average for the full session over the last 20 trading days. – Reuters