Nvidia-led megacap charge buoys Wall Street ahead of key inflation reading

By Lisa Pauline Mattackal and Ankika Biswas

(Reuters) -Wall Street rose on Wednesday, with the Nasdaq and again touching record highs as strength in Nvidia (NASDAQ:) and other mega stocks kept investor sentiment bullish before crucial inflation data and second-quarter earnings later this week.

The S&P 500 and the Nasdaq notched their fifth straight intraday record highs, with the benchmark index crossing the 5,600 level for the first time, as hopes for an interest-rate cut in September received a boost from Jerome Powell’s statement that the U.S. was “no longer an overheated economy”.

Nvidia jumped 2.4% to hit a nearly three-week high, while Micron Technology (NASDAQ:), Advanced Micro Devices (NASDAQ:) and ON Semiconductor (NASDAQ:) all rose more than 3% after Taiwan Semiconductor Manufacturing Co posted a second-quarter revenue beat.

U.S.-listed shares of the world’s largest contract chip maker climbed 2.6%. The touched a record high for the second straight session.

Of the so-called “Magnificent Seven” stocks, Alphabet (NASDAQ:) and Microsoft (NASDAQ:) rose 0.7% and 0.2%, respectively. Apple (NASDAQ:) also climbed 1.6% to a record high, as U.S. Treasury yields slipped.

The S&P 500 Materials Index topped sectoral gainers, with nine of the 11 major S&P 500 sub-sector indexes in the green. The small-cap gained 0.6%.

With just a handful of large-cap stocks supporting Wall Street’s banner rally this year, participants have been wondering when other sections of the market will catch up, leading some to call for greater diversification.

Federal Reserve Chair Powell said on his second day of Congressional testimony that he was not ready to conclude that inflation was moving sustainably down to 2%, although he expressed “some confidence of that”.

His comments come ahead of key inflation data this week, with the Consumer Price Index due on Thursday and the Producer Price Index report on Friday.

“We expect to see continued albeit slow disinflation… and with increasing signs that the U.S. economy is slowing down, we believe that the Fed could be in a position to lower interest rates in September,” said Julien Lafargue, chief market strategist at Barclays Private Bank.

Bets on a 25-basis-point rate cut by September ticked up to 74%, up from around 70% on Tuesday and 45% a month ago, according to CME’s FedWatch.

The second-quarter earnings season, which kicks off this week with major banks reporting on Friday, will be a key test for whether high-flying megacaps can justify expensive valuations and continue their strong runs.

At 12:15 a.m. ET, the was up 122.21 points, or 0.31%, at 39,414.18, the S&P 500 was up 23.63 points, or 0.42%, at 5,600.61, and the was up 99.39 points, or 0.54%, at 18,528.68.

TurboTax parent Intuit (NASDAQ:), which plans to lay off about 10% of its workforce, lost 4.0%.

Gene-sequencing equipment maker Illumina (O:) jumped 4.9% on plans to acquire privately held Fluent (NASDAQ:) BioSciences.

© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 24, 2024.  REUTERS/Brendan McDermid/File Photo

Advancing issues outnumbered decliners by a 2.66-to-1 ratio on the NYSE, and by a 1.47-to-1 ratio on the Nasdaq.

The S&P index recorded 21 new 52-week highs and nine new lows, while the Nasdaq recorded 41 new highs and 91 new lows.

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