NEW YORK: The tech-heavy Nasdaq jumped over 1% on Tuesday, buoyed by strength in Nvidia and other megacaps, while the Dow slipped as investors awaited a crucial inflation print this week for further cues on the US monetary policy path.
AI chip firm Nvidia soared 6%, recovering some of the steep losses it had notched in three consecutive declining sessions. At current levels, the stock is still 12% away from last week’s record high.
“The Nvidia story is currently more of a technical one, and not necessarily fundamental. It could be a great stock in the long run, but investors just need to be cautious,” said Cetera Investment Management’s chief market strategist, Brian Klimke.
Arm Holdings, Broadcom and Applied Materials also gained 2%-4%, helping the Philadelphia SE semiconductor index rise 1.4% after its recent slide.
Megacaps including Alphabet and Meta Platforms rose 2% each, helping the S&P 500 communication services index gain 1.3%. Technology led sectoral gains, up 1.5%, recovering from a three-day slide.
The recent pullback in tech and tech-adjacent stocks had prompted investors to lap up lagging sectors, with utilities and energy enjoying strong gains on Monday.
“We’ve been calling for broadening to other segments for a while. Indexes are really concentrated within a few top holdings, so even though you’ve been hurt recently by these names doing so well, it’s good to be diversified,” Klimke added. The Dow pulled back from a one-month high hit on Monday, while the small-cap Russell 2000 index also lost some steam.
The Dow Jones Transport Average also dropped 1.5% after recent gains. Index-heavyweight FedEx lost 1% ahead of its quarterly results after markets close.
Technology and other growth stocks have driven the S&P 500 and the Nasdaq to record highs this year, but the continued underperformance in the value-tilted Dow has raised some concerns over the sustainability of equity strength.
The most-anticipated event of the week is the personal consumption expenditures (PCE) price index - the Fed’s preferred inflation gauge on Friday.
Traders see 61% odds of a 25-basis-point rate cut in September, and are eyeing around two cuts by the year-end, according to LSEG’s FedWatch data.
At 11:58 a.m. ET, the Dow Jones Industrial Average was down 292.73 points, or 0.74%, at 39,118.48, the S&P 500 was up 17.30 points, or 0.32%, at 5,465.17, and the Nasdaq Composite was up 211.11 points, or 1.21%, at 17,707.92.
Spirit AeroSystems slumped 5.3%. A report showed Boeing has offered to acquire the airplane fuselage maker in a deal funded mostly by stock that values its key supplier at about $35 per share. Boeing dropped 3%.
Cruise operator Carnival Corp gained 7.4% after raising its annual profit forecast for the second time this year.
Walmart fell 2.5% after its CFO flagged the second quarter as the “most challenging quarter” at the NYSE 2024 European Investor Conference in London.
Declining issues outnumbered advancers for a 2.05-to-1 ratio on the NYSE and for a 1.46-to-1 ratio on the Nasdaq. The S&P index recorded 18 new 52-week highs and two new lows, while the Nasdaq recorded 32 new highs and 120 new lows.