Wall Street Gains as Tech Stocks Surge Amid Fed Clarity

Wall Street's main indexes closed higher on Monday with significant gains in technology and consumer discretionary sectors. Key stocks like Apple, Microsoft, and Nvidia fluctuated, while chip stocks boosted the semiconductor index. Investors anticipate economic data and Federal Reserve comments for further guidance on monetary policy. Fed rate cuts may begin by September.

Wall Street's main indexes closed higher on Monday as investors awaited new economic data and comments from Federal Reserve officials for more clarity on monetary policy. Megacaps Apple and Microsoft rose in a rebound from early losses. Artificial intelligence chip leader Nvidia retreated from a record high.

Other rallying chip stocks helped to send the Philadelphia SE Semiconductor index briefly to an all-time high. Broadcom and U.S.-listed shares of Taiwan Semiconductor Manufacturing Co were both up while Micron Technology rose after price-target raises by brokerages. Technology and consumer discretionary were the biggest gainers among the 11 S&P 500 sector indexes, while real estate and utilities led declines.

"There is hope that lower interest rates might come into play looking forward, reducing housing costs and helping consumers out," said J. Bryant Evans, investment advisor and portfolio manager at Cozad Asset Management in Champaign, Illinois. Goldman Sachs lifted its 2024 year-end target for the S&P 500 Index to 5,600 from 5,200, while Evercore ISI raised its forecast for the benchmark index to 6,000 from 4,750.

Both brokerages cited technology strength and enthusiasm for AI as reasons for their upgrades. The tech-heavy Nasdaq and S&P 500 hit multiple all-time peaks in the previous week.

The Fed will be able to cut its benchmark interest rate once this year, Philadelphia Fed President Patrick Harker said on Monday, if his economic forecast plays out. New York Fed President John Williams and Fed Board Governor Lisa Cook will speak later on Monday.

This week's economic roster includes May retail sales data on Tuesday, followed by industrial production, housing starts and the S&P flash Purchasing Managers' Index. Markets will be closed on Wednesday for the Juneteenth holiday.

The Fed held interest rates steady

on Wednesday and pushed out the start of rate cuts to perhaps as late as December. However, markets still expect about two 25-basis-point cuts this year, LSEG data showed. The CME FedWatch tool shows easing is still seen beginning at the September meeting.

According to preliminary data, the S&P 500 gained 41.80 points, or 0.77%, to end at 5,473.40 points, while the Nasdaq Composite gained 167.44 points, or 0.95%, to 17,856.33. The Dow Jones Industrial Average rose 190.50 points, or 0.49%, to 38,779.66. Autodesk jumped after a report that activist investor Starboard Value had bought a roughly $500 million stake in the software maker.