By Saeed Azhar and Amruta Khandekar
NEW YORK (Reuters) – The S&P 500 and the Nasdaq closed higher on Monday as shares of chipmaker Nvidia surged following a bullish note from Morgan Stanley, leading gains in other megacap growth stocks.
Nvidia jumped 7.1%, its biggest single-day increase since May 25, when its 24% surge on a stellar revenue forecast pointed to the game-changing potential of artificial intelligence.
The rally in the chipmaker’s stock pushed the information technology index 1.85% higher, making it the strongest of 11 S&P 500 sector indexes.
Other megacap growth stocks rose, including Alphabet, up 1.4% and Amazon.com, up 1.6%. Chipmaker Micron Technology ended with a 6.1% gain.
The S&P 500 climbed 0.58% to end the session at 4,489.72 points. The Nasdaq gained 1.05% to 13,788.33 points, while Dow Jones Industrial Average rose 0.07% to 35,307.63 points.
“It’s the first day in a while that tech has really significantly outperformed,” said Jay Hatfield, CEO of Infrastructure Capital Advisors in New York.
“That’s indicative of the fact that you have this blockbuster Nvidia report coming up and that could support the tech market pretty substantially.”
Nvidia, one of several tech companies rallying this year on optimism about AI, is due to report quarterly results next week.
“NVIDIA remains our top pick, with a backdrop of the massive shift in spending towards AI, and a fairly exceptional supply-demand imbalance that should persist for the next several quarters,” Morgan Stanley analysts said in a note on Monday.
Tesla fell 1.2% after the electric automaker said it had cut prices in China for some Model Y versions.
Market focus this week will be on quarterly earnings from major U.S. retailers including Walmart and Target.
Expected economic data includes retail sales for July that will shape expectations for the direction for U.S. interest rates.
Traders see a nearly 89% chance that the Fed will keep its interest rates unchanged next month, according to CME Group’s Fedwatch tool.
Goldman Sachs’ latest report said its baseline forecast calls for the Fed to start cutting the funds rate in
the second quarter of 2024.
Keeping a lid on global market sentiment, investors remained concerned about China’s highly leveraged property sector after the country’s top private property developer, Country Garden, sought to delay payment on a private onshore bond for the first time.
PayPal Holdings rose 2.8% after the company named Alex Chriss, a top executive at tax-preparation software firm Intuit, as its new chief executive officer.
AMC Entertainment common shares tumbled almost 36%. On Friday, a Delaware judge approved the theater chain’s revised stockholder settlement. The company’s preferred stock surged 16%.
Hawaiian Electric Industries shares plunged almost 34%, as scrutiny mounted over whether the utility’s equipment played any role in deadly wildfires that burnt through the coastal Maui town of Lahaina.
Volume on U.S. exchanges was light, with 9.7 billion shares traded, compared to an average of 10.9 billion shares over the previous 20 sessions.
Declining stocks outnumbered rising ones within the S&P 500 by a 1.1-to-one ratio.
The S&P 500 posted 8 new highs and 11 new lows; the Nasdaq recorded 50 new highs and 192 new lows.
(Reporting by Amruta Khandekar and Shristi Achar A in Bengaluru and Saeed Azhar in New York; Editing by Arun Koyyur, Maju Samuel and David Gregorio)
