US Market: Nasdaq Hits Record High Amid Technology Stock Surge Ahead Of Nvidia Earnings, S&P 500 Rises

In the US market, the Nasdaq Composite soared to a new record high on Monday, with technology stocks leading the charge as investors eagerly anticipated Nvidia's upcoming quarterly earnings report. Meanwhile, the S&P 500 edged up slightly, buoyed by gains in the tech sector, as market participants speculated about potential interest rate cuts from the Federal Reserve.

The S&P 500 technology index spearheaded the advance among the 11 major S&P sectors, rising by 1.32%. This uptick was driven largely by chipmakers, including Nvidia, which saw its stock climb 2.49% ahead of its quarterly earnings announcement scheduled for Wednesday. Investors are looking for signs that Nvidia, a leader in AI chips, can sustain its rapid growth and fend off competitors.

The enthusiasm surrounding Nvidia was further fueled by at least three brokerages raising their price targets for the company. Similarly, Micron Technology experienced a 2.96% increase after Morgan Stanley upgraded the memory chipmaker to "equal-weight" from "underweight." Consequently, the PHLX semiconductor index jumped 2.15%.

Stephen Massocca, senior vice president at Wedbush Securities, remarked, "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."

While the Nasdaq Composite rose 108.91 points, or 0.65%, to close at 16,794.87, 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%, finishing at 5,308.13. The Dow's decline was partly due to a 4.5% drop in JPMorgan Chase & Co shares, following CEO Jamie Dimon's cautious outlook and his statement that the company would not repurchase its stock at current prices.

The current earnings season, coupled with emerging signs of cooling inflation, has rekindled hopes for potential rate cuts by the Federal Reserve this year. This optimism has driven major averages to unprecedented levels, with the Dow closing above 40,000 points for the first time last week.

However, comments from Fed officials on Monday did little to solidify expectations for rate cuts, as they remained non-committal about easing inflation pressures and emphasized the need for a cautious approach. The minutes of the Fed's latest monetary policy meeting, set to be released on Wednesday, are expected to provide further insights. According to the CME's FedWatch Tool, markets are currently pricing in a 63.3% chance of at least a 25 basis points (bps) cut at the September meeting.

The ongoing rally has sparked concerns regarding stock valuations, with the S&P 500 now trading at a forward price-to-earnings ratio of 20.8, significantly higher than its historic average of 15.9, as per LSEG data. Despite this, Deutsche Bank has raised its 2024 year-end S&P 500 target to 5,500 from 5,100 points, marking the highest forecast among major brokerages. Meanwhile, Morgan Stanley predicts the index will reach 5,400 by June 2025.

Norwegian Cruise Line stood out among individual stocks, surging 7.56% after the company raised its annual profit forecast. Overall, advancing issues outnumbered decliners by a 1.14-to-1 ratio on the New York Stock Exchange (NYSE), while on the Nasdaq, decliners slightly outnumbered advancers by a 1.01-to-1 ratio.

The S&P 500 recorded 58 new 52-week highs and four new lows, whereas the Nasdaq logged 222 new highs and 101 new lows. Trading volume on US exchanges was robust, with 12.31 billion shares traded, compared to the 11.82 billion average over the last 20 trading days.

Investors are now turning their attention to Nvidia's earnings report on Wednesday, which could set the tone for the tech sector in the coming weeks. Additionally, the Fed's meeting minutes and any forthcoming data on inflation will be closely watched for indications of future monetary policy actions. As the market navigates these developments, the interplay between corporate earnings, economic indicators, and Fed policy will likely continue to drive market sentiment and valuations.