US stocks up as investors juggle Fed with AI enthusiasm

WALL STREET’S main indexes closed higher on Monday, with mega-cap growth stocks such as Alphabet and Tesla supporting a rebound in technology-heavy Nasdaq while investors also waited anxiously for the US Federal Reserve’s meeting this week.

Google’s parent Alphabet provided a sizeable boost to the market after a media report that Apple is in talks to build Google’s Gemini artificial intelligence (AI) engine into the iPhone.

This supported the communication services sector, which ended up almost 3%, leading gains among the 11 major S&P 500 sectors after hitting its highest level since Sept. 2021.

Tesla shares finished up 6.3%, leading S&P 500 percentage gains, after the electric carmaker said it would soon increase the price of its Model Y electric vehicles (EVs) in parts of Europe.

Nvidia shares added 0.7% but closed well below its session high. The artificial intelligence posterchild kicked off its annual developer conference as investors waited for new chip announcements from Chief Executive Jensen Huang.

Investors were torn between enthusiasm about the prospects for AI on the technology sector and worries ahead to the Federal Reserve’s policy update on Wednesday, according to Lindsey Bell, chief strategist at 248 Ventures in Charlotte, North Carolina.

The Dow Jones Industrial Average rose 75.66 points or 0.2% to 38,790.43; the S&P 500 gained 32.33 points or 0.63% to 5,149.42; and the Nasdaq Composite gained 130.27 points or 0.82% to 16,103.45.

The Nasdaq snapped three straight days of losses.

The Philadelphia Semiconductor index gave up gains to end the day virtually unchanged while the S&P 500 technology index finished up 0.5%. Of the S&P’s 11 major sectors the weakest were rate sensitive real estate and healthcare, with both off 0.02%.

Goldman Sachs on Monday said they now expect three interest rate cuts in 2024, compared with four expected earlier, after inflation came in a bit firmer than expected.

Exchange operator Nasdaq said it resolved an issue related to connectivity and stock orders that had affected early trading for more than two hours on Monday.

US-listed shares of Xpeng added 1.9% on its plans to launch a cheaper EV brand amid fierce price competition.

Boeing finished down 1.5% after a media report that a federal grand jury in Seattle issued a subpoena to the plane maker over the Jan. 5 midair blowout of a Boeing door plug on an Alaska Airlines flight.

Super Micro Computer, which joined the S&P 500 on Monday, gave up earlier gains to close down 6.4%, making it the biggest percentage decliner on the day in the benchmark index.

Advancing issues outnumbered decliners by a 1.17-to-1 ratio on the NYSE where there were 224 new highs and 58 new lows.

On the Nasdaq 1,905 stocks rose and 2,400 fell as declining issues outnumbered advancers by about a 1.26-to-1 ratio.

The S&P 500 posted 41 new 52-week highs and one new low while the Nasdaq recorded 102 new highs and 131 new lows.

On US exchanges 11.16 billion shares changed hands compared with the 12.41 billion average for the last 20 sessions. —