Wall Street saw gains on Monday, with the S&P 500 and Dow Jones Industrial Average reaching new record highs as technology stocks rallied ahead of a week filled with corporate earnings reports and key economic data. Trading volume was lighter than usual, with 9.55 billion shares traded due to the federal holiday closure of bond markets, down from the 12.05 billion shares typically traded over the last 20 days.
Tech stocks, particularly semiconductor companies, were strong performers, with an index tracking the sector up 1.8%. Arm Holdings and Nvidia led the charge, rising 6.8% and 2.4%, respectively, pushing Nvidia to a record close. The information technology sector rose 1.4%, driven by gains in Alphabet, Apple, Microsoft, and Tesla, which saw advances between 0.6% and 1.6%.
The S&P 500 closed up 0.77% to 5,859.85 points, while the Nasdaq Composite gained 0.87% to 18,502.69 points. The Dow rose 0.47% to 43,065.22, surpassing the 43,000-point threshold for the first time. However, the Dow’s gains were limited by a 2% drop in Caterpillar, which followed a brokerage downgrade, and a 1.3% decline in Boeing after it forecast a larger-than-expected third-quarter loss.
With 41 S&P 500 companies set to release earnings this week, including Bank of America, Citigroup, Johnson & Johnson, and UnitedHealth Group, investors are eager for data that could justify the market’s high valuations. Currently, the S&P 500 is trading at 21.8 times forward earnings, significantly above the long-term average of 15.7.
Earnings growth for the third quarter is estimated at 4.9% year-over-year, and some analysts believe that lowered expectations may make it easier for companies to post favorable results. Kevin McCullough, portfolio consultant at Natixis Investment Managers Solutions, suggested that the reduced expectations might lead to an upside in this earnings cycle.
Investors are also anticipating key economic reports, including retail sales data, to gauge the health of U.S. consumers and gain insights into Federal Reserve policy. Fed officials on Monday expressed cautious views on interest rates, with Minneapolis Fed President Neel Kashkari suggesting modest cuts ahead and Fed Governor Christopher Waller calling for caution in future rate decisions.
