On Monday, megacap growth stocks, including Apple and Tesla, propelled the tech-heavy Nasdaq to a higher close, while the Dow and the S&P 500 also saw modest gains amid light pre-holiday trading.
Apple (AAPL.O) surged 2.9%, Microsoft (MSFT.O) rose 2%, and Amazon.com (AMZN.O) ended 2.2% higher, boosting the Nasdaq significantly.
Ben Snider, a senior equity strategist at Goldman Sachs Research, emphasized the robust economic outlook, stating, “The most important driver of earnings is GDP and the economy still looks very healthy to us.” He noted expectations for strong economic growth above 2% in the U.S., supporting solid revenue growth.
Highlighting the pivotal role of technology stocks, Snider mentioned that a quarter of earnings on the S&P 500 index comes from these large tech companies, which continue to show strength.
Tesla (TSLA.O) shares surged 6.1% ahead of second-quarter vehicle delivery data, although concerns about slowing growth in deliveries lingered, leading Wells Fargo to maintain an “underweight” rating.
However, semiconductor stocks faced pressure, with Advanced Micro Devices (AMD.O) dropping 2.8% and Arm Holdings falling 2.9%, dragging the Philadelphia SE Semiconductor index (.SOX) close to a one-week low.
Real estate stocks (.SPLRCR), seen as bond proxies, fell nearly 1% as U.S. Treasury yields rose to multi-week highs. Conversely, higher yields typically benefit banks, boosting the S&P 500 banks index (.SPXBK) to its highest level in over a month. JP Morgan Chase (JPM.N) shares hit an all-time high following a dividend hike and share buyback authorization.
Chewy (CHWY.N) experienced a 6.7% decline after early gains reversed, triggered by investor Keith Gill disclosing a stake in the company.
Trading volumes were light ahead of the U.S. Independence Day holiday closure on Thursday, with total volume on U.S. exchanges at 10.59 billion shares, below the 11.89 billion average for a full session over the last 20 trading days.
Economic data showed manufacturing contracted for a third consecutive month in June, but prices paid dropped to a six-month low, suggesting some easing in inflation pressures, aligning with the Federal Reserve’s objectives.
Looking ahead, market focus will be on upcoming economic reports including JOLTS job openings, ADP employment, factory orders, ISM services PMI, and the Fed’s policy meeting minutes, culminating in the non-farm payroll data release on Friday.
The Dow Jones Industrial Average (.DJI) rose 50.66 points to close at 39,169.52, the S&P 500 (.SPX) gained 14.61 points to 5,475.09, and the Nasdaq Composite (.IXIC) advanced 146.70 points to 17,879.30.
Despite a higher Nasdaq and S&P 500 posting new highs, concerns over the Dow’s quarterly decline have prompted discussions about the need for diversified investor portfolios.
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