A trader works on the floor at the New York Stock Exchange in New York City, March 7, 2024.
(Reuters) — The blue-chip Dow and the benchmark S&P 500 inched up on Tuesday, shored up by financials stocks in anticipation of a key policy verdict from the Federal Reserve this week, while investors also awaited Big Tech results.
Microsoft, widely seen as a front-runner in the artificial intelligence landscape, will release its quarterly results after markets close. Its stock was up 0.2%.
Other megacaps such as Apple, Amazon.com, Meta and Alphabet were up between 0.3% and 0.6%, while a 1.0% drop in Nvidia’s shares curtailed moves on the tech-heavy Nasdaq.
At 10:10 a.m. ET, the Dow Jones Industrial Average was up 139.83 points, or 0.34%, at 40,679.76, the S&P 500 was up 8.89 points, or 0.16%, at 5,472.43, and the Nasdaq Composite was down 4.29 points, or 0.02%, at 17,365.91.
Seven of the 11 S&P 500 sectors were in gains, led by a 1.2% rise in Financials stocks. An index tracking banks was also up 1.5%.
Coupled with Tesla’s disappointing results, Alphabet’s higher expenditure forecast induced a broad-based market sell-off in the previous week, largely driven by megacap stocks.
The bar is set high for these highly valued technology behemoths. Their quarterly results will be scrutinized for signs that they have the momentum to induce further AI-led equity rallies.
“What we’re looking for is how some of these (companies) are going to continue spending money on AI adoption and building AI universes for themselves and if investors will continue to give them enough rope in order to do that,” said Scott Ladner, chief investment officer at Horizon Investments.
On the data front, a Job Openings and Labor Turnover Survey pointed to 8.18 million job openings in June, compared to economists’ expectation of 8 million, ahead of Friday’s Non-farm Payrolls reading.
The continued improvement in inflation and an easing jobs market have bolstered expectations of the Federal Reserve signaling an interest-rate cut in September when it delivers its policy decision on Wednesday. Odds of a 25-basis-point cut are at 89.6%, according to CME’s FedWatch Tool.
Any hawkish commentary could sharply weigh on equities, analysts fear.
Hopes of an early start to rate cuts have prompted an investor run to mid- and small-cap stocks and away from market domineering tech-related sectors.
The small-caps index advanced 0.8% and is poised to sharply outperform the three major U.S. stock indexes in July, while the Dow is also set for its best month so far in 2024.
Bucking the trend, the Consumer Staples sector fell 1.1%, bogged down by Procter & Gamble’s 6.1% fall after the company missed Street expectations for fourth-quarter sales.
Merck lost 7.1% after the drugmaker cut its annual profit forecast, while CrowdStrike shed 7.5% after a report that Delta Air Lines sought compensation from Microsoft and the cybersecurity firm for the global cyber outage earlier this month.
Cybersecurity and cloud services company F5 jumped 11.2% after forecasting fourth-quarter results above estimates.
Symbotic slumped 19.8% after the robotics vendor forecast current-quarter revenue and adjusted core profit below estimates.
Advancing issues outnumbered decliners by a 1.98-to-1 ratio on the NYSE, and by a 1.32-to-1 ratio on the Nasdaq.
The S&P index recorded 57 new 52-week highs and no new lows, while the Nasdaq recorded 76 new highs and 50 new lows.
