S&P 500, Nasdaq end higher as Nvidia surge leads megacap gains

The cyclical Dow was all over the place today moving between red and black several times and going more than 100 points in the red as late as 3 pm before surging in the final hour to a modest gain. The same was not true of the tech-bound S&P and Nasdaq which were on the upswing all day on the strength of Morgan Stanley giving Nvidia good grades which strengthened speculation that the company’s up and coming report would be a blockbuster and pushing the entire tech index higher. Now all eyes are on Q2 reports coming from retailers this week and how that might impact rates. Currently, the odds are 89% that there will be no rate hike next month and Goldman Sachs has forecasted the first rate cuts to come in Q2 ’24.  Volume was considerably below average at 9.7 billion. 

S&P 500, Nasdaq end higher as Nvidia surge leads megacap gains

By Saeed Azhar and Amruta Khandekar

Mon August 14, 2023 4:01 PM

DJ: 35,281.40  +105.25        NAS: 13,644.85  -93.14        S&P: 4,464.05  -4.78        8/11

DJ: 35,307.63  +26.23          NAS: 13,788.33  +143.48     S&P: 4,489.72  +25.67     8/14

NEW YORK, Aug 14 (Reuters) - The S&P 500 and the Nasdaq closed higher on Monday as shares of chipmaker Nvidia jumped following a bullish note from Morgan Stanley, leading other megacap growth stocks higher as investors awaited earning reports from U.S. retailers.  Nvidia's (NVDA.O) gain pushed the information technology index (.SPLRCT) higher, making it the strongest of 11 S&P 500 sector indexes.  Other megacap growth stocks including Alphabet (GOOGL.O), and Amazon.com (AMZN.O) also posted gains, as did chipmaker Micron Technology (MU.O).

The S&P 500 climbed 0.58% to end the session at 4,489.72 points. The Nasdaq gained 1.05% to 13,788.33 points, while Dow Jones Industrial Average rose 0.07% to 35,307.63 points.  "It's the first day in a while that tech has really significantly outperformed," said Jay Hatfield, CEO of Infrastructure Capital Advisors in New York. 

"That's indicative of the fact that you have this blockbuster Nvidia report coming up and that could support the tech market pretty substantially."  Nvidia, one of several tech companies rallying this year on optimism about artificial intelligence, is due to report quarterly results next week.  "NVIDIA remains our top pick, with a backdrop of the massive shift in spending towards AI, and a fairly exceptional supply-demand imbalance that should persist for the next several quarters," Morgan Stanley analysts said in a note on Monday.

The Nasdaq and S&P 500 fell last week after hotter-than-expected U.S. producer prices data fanned concerns that the Federal Reserve could keep U.S. interest rates higher for longer.

Tesla (TSLA.O) bucked the session's upward trend, falling after the electric automaker said it had cut prices in China for some Model Y versions. 

Market focus this week will be on quarterly earnings from major U.S. retailers including Walmart (WMT.N) and Target (TGT.N).  Expected economic data includes retail sales for July that will shape expectations for the direction for U.S. interest rates.  Traders see a nearly 89% chance that the Fed will keep its interest rates unchanged next month, according to CME Group's Fedwatch tool.  Goldman Sachs' latest report said its baseline forecast calls for the Fed to start cutting the funds rate in the second quarter of 2024.

Keeping a lid on global market sentiment, investors remained concerned about China's highly leveraged property sector after the country's top private property developer, Country Garden, sought to delay payment on a private onshore bond for the first time.  PayPal Holdings (PYPL.O) rose after the company named Alex Chriss, a top executive at tax-preparation software firm Intuit (INTU.O), as its new chief executive officer.  AMC Entertainment common shares (AMC.N) tumbled. On Friday, a Delaware judge approved the theater chain's revised stockholder settlement. The company's preferred stock surged. 

Hawaiian Electric Industries (HE.N) shares plunged as scrutiny mounted over whether the utility's equipment played any role in deadly wildfires that burnt through the coastal Maui town of Lahaina. 

Volume on U.S. exchanges was light, with 9.7 billion shares traded, compared to an average of 10.9 billion shares over the previous 20 sessions.

Declining stocks outnumbered rising ones within the S&P 500 (.AD.SPX) by a 1.1-to-one ratio.

The S&P 500 posted 8 new highs and 11 new lows; the Nasdaq recorded 50 new highs and 192 new lows.