US Stock Market: Tech Stocks Drive Wall Street; Nasdaq Jumps After 1,500 Points Crash; DJIA, S&P 500 Gains

The US stock market witnessed a strong rally on June 29th, driven by tech stocks. The Nasdaq Composite and Nasdaq 100 indexes skyrocketed after four consecutive days of crashing. Meanwhile, the Dow Jones surged nearly 0.6% and the S&P 500 rallied over 1%. Following this, US stock futures traded sideways on Tuesday, as easing geopolitical tensions supported equities.

US Stock Market Rally:

The Dow Jones Industrial Average (DJIA) gained by 306.63 points or 0.6% to close at 52,182.74. The index had touched an intraday high of 52,311.63, which is closer to its record high of 52,655.66.

Furthermore, the S&P 500 rose by 86.41 points or 1.2% to end at 7,440.43. S&P 500 is also near its record high of 7,620.90.

The star-performer though was Nasdaq and Nasdaq 100. On June 29, Nasdaq Composite surged by 522.53 points or 2.07% to close at 25,820.14, which is after crashing by 1,503 points in previous four consecutive days. Also, Nasdaq 100 index outperformed with 656.51 points or 2.25% upside to finish at 29,774.75.

The rally was fueled by strong buying in major tech stocks. Elon Musk's SpaceX which is listed on Nasdaq 100, zoomed by 7.15% to close at $164.19. The rocket giant alone gained $144.33 billion overnight. Also, Google's parent company, Alphabet who debuted as a Dow component, emerged as biggest winner with gains of $202.56 billion in market value. Alphabet rose by nearly 5% to $351.28.

Also, Tesla stock was up by 8.5%, followed by TSMC and Amazon which advanced by 5.3% and 3.20%. Additionally, the largest stock of the world, Nvidia, rallied by 1.3%.

The market is expected to hold a cautious bias as investors closely monitor renewed geopolitical tensions ahead of the next round of U.S.-Iran negotiations. Crude oil prices continue to hold on to their recent gains, with Brent trading in the $70-71 per barrel range following the latest military exchanges between the United States and Iran over the weekend, as per Ponmudi R, CEO of Enrich Money.

Ponmudi added, investor attention is now firmly focused on the upcoming negotiations in Doha, with hopes that diplomatic progress will help ease regional tensions. However, any escalation or disruption to shipping through the Strait of Hormuz could reignite concerns over energy supplies, inflation and global risk sentiment, making developments in the region the key market driver in the sessions ahead.

US Stock Market Outlook:

According to Joe Mazzola, Charles Schwab's Head Trading & Derivatives Strategist, three things to watch out for US market:

1. Manufacturing, job openings ahead:

In Mazzola's view, jobs aren't the only reports on the near horizon. Wednesday brings the June ISM U.S. manufacturing index, an important metric for an industrial economy that appears to be recovering in a trend that's supported sectors beyond those heavily exposed to tech. What the Federal Reserve decides could be influenced by that and other data, starting with the Job Openings and Labor Turnover Survey (JOLTS) due soon after Tuesday's opening bell.

2. Yields set tone:

According to the strategist, treasury yields seemed less correlated with crude earlier this month than they were back in May, but they tracked crude down last week as the price of oil dipped to nearly pre-war levels. If oil rises, the 10-year Treasury note yield could, too, possibly hurting chances for a non-tech rally. When the yield has been below 4.5% lately, money has gone into sectors beyond tech. When yields climb to 4.5% or higher, money gravitates back toward tech. Jobs data could have an impact on the path of yields, which are down over the last week despite growing expectations of a possible Federal Reserve rate hike sometime this year. Fed Chairman Kevin Warsh speaks at a forum in Europe Wednesday.

3. Line in the sand for indexes:

"Technically, both the S&P 500 Index and the PHLX Semiconductor Index (SOX) trade near key junctures that could determine where they head prior to earnings season starting in mid-July. The S&P 500 closed Friday just below its 50-day moving average for the first time since early April. Several closes under that line, now at 7,363, lasting more than a few days could represent a signal change. The Nasdaq-100 rests just above its 50-day moving average to start the week. And the SOX closed Friday below the closely watched 21-day moving average. The SOX also drifted below that earlier this month for a couple days but regained its footing, seen as technically positive at the time," Mazolla said in a note on June 29.

Adding further, he said, now it's losing steam and at one point last week was down nearly 10% intraday from last Monday's peak, the definition of a correction. "While the broadening of the rally appears to be intact, and lower oil prices and yields are net bullish, I'm concerned about tech in the near-term," my colleague Peterson said. "The sector may be susceptible to some additional deleveraging." Margin debt in the U.S. hit a record $1.42 trillion in May.