The Nasdaq and S&P 500 experienced slight upticks on Monday, bolstered by a decline in U.S. Treasury yields that favored megacap growth stocks. Investors also took note of data indicating a second consecutive month of eased manufacturing activity in May.
Major tech stocks, including Apple, Meta, and Alphabet, saw gains ranging from 1.1% to 1.7%, as yields on the benchmark U.S. 10-year and five-year notes each fell by around 10 basis points. Nvidia, a leader in artificial intelligence, surged 3.4%, propelling a 0.8% increase in the Philadelphia SE Semiconductor Index. Nvidia’s CEO, Jensen Huang, announced on Sunday that the company’s next-generation AI chip platform would debut in 2026.
GameStop shares skyrocketed 26.8% following a Reddit post by influential investor Keith Gill, known as “Roaring Kitty,” revealing a $116 million investment in the gaming retailer. Meanwhile, NYSE Equities reported investigating a technical issue causing volatility pauses for numerous stocks on the exchange.
Six of the eleven S&P 500 sectors recorded gains, with technology leading at 0.9%. However, the energy sector experienced a decline of 1.7%. A survey from the Institute for Supply Management showed manufacturing activity easing to 48.7 in May, below the expected 49.6, signaling a cooling economy.
Yields began to retreat from one-month highs on Friday as investors speculated on potential interest rate cuts by the Federal Reserve starting in September, following cooling inflation as indicated by the Personal Consumption Expenditures Price Index.
Despite the S&P 500 and Nasdaq breaking their five-week winning streaks on Friday, all three major Wall Street indexes ended May with substantial gains. The S&P 500 climbed 4.8%, the Dow Jones increased by 2.3%, and the Nasdaq surged nearly 7%, driven by strong earnings and hopes for easing monetary policy.
“AI advancements, earnings, and inflation will continue to drive the market,” noted Sam Stovall, chief investment strategist at CFRA Research.
Investors are now turning their attention to crucial economic data due this week, including manufacturing and services sector surveys, factory orders, and the closely watched nonfarm payrolls report on Friday. These reports will provide insights into the health of the U.S. economy and the Federal Reserve’s likely actions.
“We’ll be closely watching employment data this Friday along with a slew of other economic reports, keeping inflation at the forefront of investors’ minds,” added Stovall.
As of 10:14 a.m. ET, the Dow Jones Industrial Average had decreased by 46.63 points, or 0.12%, to 38,639.69, while the S&P 500 rose by 11.74 points, or 0.22%, to 5,289.25, and the Nasdaq Composite climbed by 103.70 points, or 0.62%, to 16,838.71.
The blue-chip Dow lagged, pressured by declines in financial stocks such as Goldman Sachs and JPMorgan Chase & Co. Conversely, Paramount Global shares jumped 7.1% following reports that Skydance Media is poised to acquire the company.
JetBlue Airways saw a 4.7% increase in its stock price after forecasting a smaller-than-expected drop in second-quarter revenue, attributing this to strong travel demand.
On the NYSE, advancing issues outnumbered decliners by a 1.34-to-1 ratio, and on the Nasdaq, by a 1.38-to-1 ratio. The S&P index recorded 18 new 52-week highs and three new lows, while the Nasdaq noted 39 new highs and 46 new lows.
Market Implications and Investment Opportunities
Short-Term Market Reactions: The rise in tech and semiconductor stocks suggests a favorable environment for growth-oriented investments. Investors can capitalize on this by focusing on high-performing sectors like technology and semiconductors, which are benefiting from innovations in AI and declining yields.
Long-Term Market Impact: As the Federal Reserve potentially moves towards interest rate cuts, long-term investments in growth stocks may continue to be attractive. Sectors with strong earnings prospects, such as technology, may provide sustainable growth opportunities.
Strategic Diversification: Investors should consider diversifying their portfolios to include both growth and value stocks. With manufacturing activity cooling, sectors less sensitive to economic cycles, like technology and healthcare, may offer stability and growth potential.
Leave feedback about this