Nasdaq hits record, S&P ticks higher with Nvidia results eyed
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[May 21, 2024] By
Chuck Mikolajczak
NEW YORK (Reuters) - The Nasdaq closed at a record high on Monday while
the S&P 500 gained slightly as technology stocks advanced ahead of
Nvidia's highly anticipated earnings and investors gauged the timing of
an interest rate cut by the Federal Reserve.
The S&P 500 technology index led gains among the 11 major S&P sectors,
rising 1.32%, helped by chipmakers such as Nvidia, which advanced 2.49%
ahead of its quarterly results on Wednesday.
Investors will look for evidence in Nvidia's earnings that the AI chip
leader can maintain its explosive growth and stay ahead of rivals.
At least three brokerages lifted their Nvidia price targets, while peer
Micron Technology climbed 2.96% after Morgan Stanley upgraded the memory
chipmaker to "equal-weight" from "underweight." The PHLX semiconductor
index rose 2.15%.
"If they surprise to the upside Nvidia could spark a mini fury, although
everything's kind of expensive, so it's hard to see a big move up about
it," said Stephen Massocca, senior vice president at Wedbush Securities
in San Francisco.
"If the Fed starts to lower rates, that would really spark a rally but
it doesn't seem like the data supports that yet."
The Dow Jones Industrial Average fell 196.82 points, or 0.49%, to
39,806.77. The S&P 500 gained 4.86 points, or 0.09%, at 5,308.13 and the
Nasdaq Composite rose 108.91 points, or 0.65%, to 16,794.87.
The Dow was weighed down by a 4.5% drop in JPMorgan shares after CEO
Jamie Dimon said he was "cautiously pessimistic" and said the company
would not buy back its stock at current prices.
A solid earnings season and signs inflation may be starting to cool
again have reignited hopes for Fed rate cuts this year, pushing major
averages to record levels. The blue-chip Dow closed above 40,000 points
for the first time last week.
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Traders work on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., May 16, 2024. REUTERS/Brendan McDermid/File
Photo
Comments from Fed officials on Monday did little to alter
expectations for cuts by the central bank, as they were reluctant to
say inflation pressures were easing and several stressed the need
for caution.
Minutes of the Fed's latest monetary policy meeting are scheduled to
be released on Wednesday. Markets are pricing in a 63.3% chance for
a cut of at least 25 basis points (bps) at the September meeting,
the CME's FedWatch Tool showed.
The recent rally has started to raise concerns about stock
valuations, with the S&P 500 trading at a forward price-to-earning
ratio of 20.8, well above its historic average of 15.9, according to
LSEG data.
Deutsche Bank raised its 2024 year-end S&P 500 target to 5,500 from
5,100 points, the highest among major brokerages, while Morgan
Stanley forecast it would hit 5,400 by June 2025.
Norwegian Cruise Line surged 7.56% after lifting its annual profit
forecast.
Advancing issues outnumbered decliners by a 1.14-to-1 ratio on the
NYSE. On the Nasdaq, declining issues outnumbered advancers by a
1.01-to-1 ratio.
The S&P 500 posted 58 new 52-week highs and four new lows while the
Nasdaq recorded 222 new highs and 101 new lows.
Volume on U.S. exchanges was 12.31 billion shares, compared with the
11.82 billion average for the full session over the last 20 trading
days.
(Reporting by Chuck Mikolajczak; Editing by Richard Chang)
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