US STOCKS-Megacaps' rally lifts tech-heavy Nasdaq, Fed in focus

Wall Street's main indexes rose on Monday, with a rally in megacap growth stocks such as Alphabet and Tesla supporting a rebound in technology-heavy Nasdaq while investors also waited for the U.S. Federal Reserve's meeting this week.

Wall Street's main indexes rose on Monday, with a rally in megacap growth stocks such as Alphabet and Tesla supporting a rebound in technology-heavy Nasdaq while investors also waited for the U.S. Federal Reserve's meeting this week. Growth stocks were outperforming, with Alphabet gaining 4.8% after a media report that Apple is in talks to build Google's Gemini AI engine into the iPhone.

This boosted the communication services sector, which lead gains among the 11 major S&P 500 sectors and was up 2.9% after earlier hitting its highest level since Sept. 2021. Tesla rose 6.4% after the electric carmaker said it would increase the price of its Model Y EVs in some European countries on March 22, by approximately 2,000 euros ($2,177) or its equivalent in local currencies.

Trading was choppy in artificial intelligence poster-child Nvidia, which kicks off its annual developer conference, with investors waiting for new chip announcements from Chief Executive Jensen Huang after the close. The stock was last up 1% after rising as much as 5% earlier in the day. The Philadelphia Semiconductor index also pared gains and was last up 0.6%. The S&P 500 technology index was up 1%.

"Tech, semis all of it is a little over cooked. Once something is priced to perfection the next step is usually consolidation or some type of disappointment," said Sameer Samana, Senior Global Market Strategist at Wells Fargo Investment Institute in Charlotte, NC. At 02:27 p.m. the Dow Jones Industrial Average rose 164.61 points, or 0.43% , to 38,879.38, the S&P 500 gained 45.90 points, or 0.90%, to 5,162.99 and the Nasdaq Composite gained 197.72 points, or 1.24%, to 16,170.89.

Investors were also preparing for the Fed meeting in hopes of clues about the first rate cuts. Stronger-than-expected inflation figures have prompted traders to rethink when and by how much policymakers will lower rates this year, with traders pulling back bets for a June rate cut from just a week ago, according to the CME FedWatch Tool. 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.

If the Fed were to take a hawkish tone when its policy meeting concludes on Wednesday, this could pressure stocks. "The fact we're up today provides investors with an opportunity to take profits ahead of the Fed which is more likely to disappoint than to support the recent rally in risk assets. They've tied themselves to the data and the data suggests less need to ease policy," said Samana.

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. U.S.-listed shares of Xpeng climbed 2.4% on the company's plans to launch a cheaper EV brand amid fierce price competition.

Boeing shed 1.3% after a media report that a federal grand jury in Seattle issued a subpoena to the planemaker 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 and fell 6.6%. However, the stock, which has been boosted by bets it would benefit from AI, is still up around 245% for the year-to-date.

Advancing issues outnumbered decliners by a 1.49-to-1 ratio on the NYSE, which showed 197 new highs and 47 new lows. On the Nasdaq 2,249 stocks rose and 1,947 fell as advancing issues outnumbered decliners by about a 1.16-to-1 ratio.

The S&P 500 posted 39 new 52-week highs and no new lows while the Nasdaq recorded 91 new highs and 109 new lows.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)