Ankika Biswas, Lisa Pauline Mattakal and Caroline Mandl
(Reuters) – A broad stock market rally pushed the Dow Jones Industrial Average to a one-month high on Monday as investors fled artificial intelligence stocks and added several laggards to their portfolios, betting the Federal Reserve will cut interest rates this year. .
Nvidia (NASDAQ:) shares fell for a third session, down 5.4%, as market watchers noted profit-taking at the semiconductor industry leader following its meteoric rise last week to become the world’s most valuable company.
Shares of other chipmakers, including U.S. stocks Taiwan Semiconductor Manufacturing, Broadcom (NASDAQ:), Marvell (NASDAQ:) Technology and Qualcomm (NASDAQ:), fell between 2.1% and 4%, sending the chip stock index down by 2.3%.
“The market is selling some winners and buying some laggards,” said Jack Janasiewicz, lead strategist at Natixis Investment Managers. “This is a bit of a nod to the inflation data coming out on Friday, as it is expected to be quite soft.”
The technology and consumer discretionary sectors were the only two decliners among the 11 industry indexes. Meanwhile, the energy sector grew 2.5%.
The price jumped more than 0.5% during the day, approaching a five-day winning streak. The small-cap index also hit its highest level in a week, signaling broader market gains.
“If inflation becomes softer, the market could expand significantly… The breadth will become wider, and everything beyond AI stocks,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
The biggest story to grab investors’ attention this week was Friday’s report on the Personal Consumer Expenditures (PCE) price index, the Fed’s preferred measure of inflation, which is expected to show modest price pressures.
Investors still expect about two rate cuts this year, estimating a 61% chance of a 25 basis point cut in September, according to FedWatch LSEG data. According to the Fed’s latest forecast, one rate cut is likely to occur in December.
At 2:03 p.m., the Dow was up 225.94 points, or 0.58%, at 39,376.27, the S&P 500 was down 6.84 points, or 0.13%, at 5,457.78 and the S&P 500 lost 147.38 points, or 0.83%, to 17,541.98.
Other data this week includes durable goods, weekly jobless claims and final first-quarter GDP data, as well as the year-over-year recovery in the Russell Index. Some quarterly earnings reports must also be submitted.
President Joe Biden will debate Republican rival Donald Trump in Atlanta on Thursday, a move that could influence the outcome of a November election race that polls show neck and neck.
Meta Platforms (NASDAQ:) shares rose 0.23% following a report that parent company Facebook is discussing integrating its generative AI model into Apple’s (NASDAQ:) recently announced AI system for the iPhone. Apple shares also rose 0.77%.
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Advancing issues outnumbered declining ones on the NYSE by a ratio of 2.27 to 1. The New York Stock Exchange recorded 141 new highs and 39 new lows.
The S&P 500 posted 33 new 52-week highs and one new low, while the Nasdaq Composite posted 41 new highs and 101 new lows.