By Amruta Khandekar and Shristi Achar A
(Reuters) – The S&P 500 and Nasdaq climbed on Monday as Nvidia shares rose ahead of the chip designer’s earnings this week, with investors also focused on a meeting of central bank policymakers for clues on the U.S. interest rate path.
Nvidia, which sharply outperformed its megacap peers with gains of nearly 6% last week, climbed 4.4% as HSBC raised its price target on the stock to $780, the second highest on Wall Street.
The company is expected to forecast quarterly revenue above analysts’ estimates when it reports results on Wednesday. Its earnings will be a major test whether this year’s stock market rally, fueled by optimism around the potential for artificial intelligence, will continue.
“If they (Nvidia) indicate that there is some acceleration in earnings and sales from AI or that they perceive an increase coming, it would be very meaningful to the market,” said Rick Meckler, partner at Cherry Lane Investments.
Other bruised growth stocks gained as well, with Tesla snapping six straight sessions of losses to rise 5.5%.
The S&P 500 information technology sector led the advance among the 11 major sub-indexes, rising 1.1%, while the consumer discretionary sector climbed 1.1%.
Strong gains in equities this year on signs of cooling inflation have come under test in August, with the S&P 500 losing more than 5% from its intra-day high in late July.
The yield on the 10-year note rose to a 15-year high of 4.342% as recent evidence of a robust U.S. economy stokes concerns the Federal Reserve could keep rates higher for longer.
Investors are now keenly waiting for comments from Federal Reserve Chair Jerome Powell on Friday at a meeting of central bankers at Jackson Hole in Wyoming that begins on Aug. 24.
“I don’t think the market is looking for some statement suggesting rate rises are over. But investors are looking for anything that can turn the near-term negative sentiment,” said Meckler.
Traders’ bets for a pause in rate hikes in September stood at nearly 89%, according to the CME Group’s Fedwatch tool.
Palo Alto Networks jumped 15.2% as the cybersecurity firm forecast annual billings above expectations.
Pressuring the Dow, Johnson and Johnson lost 2.2% after the healthcare conglomerate said it was expecting to retain a stake of about 9.5% in its newly separated consumer health unit, Kenvue, whose shares rose 1.4%.
At 9:55 a.m. ET, the Dow Jones Industrial Average was down 44.23 points, or 0.13%, at 34,456.43, the S&P 500 was up 15.75 points, or 0.36%, at 4,385.46, and the Nasdaq Composite was up 109.21 points, or 0.82%, at 13,399.99.
VMware gained 4.4% after UK’s competition regulator cleared U.S. tech company Broadcom’s $69 billion purchase of the cloud computing firm.
Declining issues outnumbered advancers by a 1.21-to-1 ratio on the NYSE and a 1.04-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 12 new lows, while the Nasdaq recorded 17 new highs and 82 new lows.
(Reporting by Amruta Khandekar and Shristi Achar; Editing by Arun Koyyur and Vinay Dwivedi)
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