Nasdaq 100 and S&P 500 Reach New Heights on Tech Sector Strength

Nasdaq 100 and S&P 500 – The S&P 500 Index ($SPX) closed up +1.02% on Wednesday, setting a new record, while the Dow Jones Industrials Index ($DOWI) gained +1.09%, reaching a 7-week high. The Nasdaq 100 Index ($IUXX) also rose +1.09%, buoyed by robust performances in technology stocks.

Chip Sector Boosts Tech Stocks

Chip stocks surged following Taiwan Semiconductor Manufacturing Co.’s (TSMC) strong Q2 sales report, the exclusive supplier for Nvidia and Apple’s advanced chips. This news propelled Nvidia (NVDA), Apple (AAPL), and their suppliers like ON Semiconductor (ON) and Advanced Micro Devices (AMD) to significant gains of over +3%.

Apple Soars on iPhone Sales Forecast

Apple (AAPL) surged to a record high after announcing plans to ship 90 million iPhone 16 devices in the second half of the year, marking a 10% increase from last year. This bullish forecast drove shares of Apple suppliers Qorvo (QRVO) and Skyworks Solutions (SWKS) up by more than +4%.

Mixed Performance in Software Stocks

However, not all sectors fared well. Software stocks faced pressure, with Intuit (INTU) shedding over -2% after announcing a workforce reduction of 1,800 employees. Other notable declines included Atlassian (TEAM), MongoDB (MDB), Datadog (DDOG), and Adobe.

Economic Indicators and Fed Insights

US MBA mortgage applications showed a slight decline of -0.2% for the week ended July 5. Meanwhile, Fed Chair Powell indicated cautious optimism regarding inflation, stating that while it appears to be receding, sustainability remains uncertain.

Investors are awaiting Thursday’s US CPI report, expecting a slight easing to +3.1% year-over-year for June, down from +3.3% in May. This data will influence market expectations regarding future Federal Reserve interest rate decisions.

Global Market Overview

Overseas markets closed mixed, with the Euro Stoxx 50 gaining +1.13% while China’s Shanghai Composite fell by -0.68%. Japan’s Nikkei Stock 225 Index reached a new all-time high, closing up +0.61%.

Interest Rates and Bond Markets

In bond markets, US 10-year Treasury yields fell slightly to 4.276% after a strong demand for Treasury’s $39 billion auction of reopened 10-year T-notes. European government bond yields also moved lower, reflecting cautious investor sentiment.

Outlook and Earnings Season

Looking ahead, the start of Q2 earnings season on Friday will feature major US banks reporting, including JPMorgan Chase, Citigroup, and Wells Fargo. Market sentiment remains optimistic, with expectations for corporate earnings guiding future market movements.

Investor sentiment remains attuned to key economic indicators and Federal Reserve signals. Federal Reserve Chair Powell’s remarks on inflation, indicating a cautious stance despite signs of moderation, underscore ongoing uncertainties in the economic outlook. With Thursday’s US CPI report expected to show a slight easing to +3.1% year-over-year for June, from +3.3% in May, market participants are keenly watching for insights into inflation trends and their implications for future Fed policy decisions.

Conclusion

In bond markets, US 10-year Treasury yields edged lower to 4.276% following strong demand for Treasury’s auction of reopened 10-year T-notes. European government bond yields also declined, reflecting cautious investor sentiment and global economic uncertainties.

As the Q2 earnings season commences, market focus shifts to corporate performance, with major US banks such as JPMorgan Chase, Citigroup, and Wells Fargo set to report quarterly results on Friday. Investor sentiment hinges on earnings outcomes and economic data releases, which are expected to shape market sentiment and future investment strategies amidst evolving economic conditions.

In conclusion, US stock markets attained new highs bolstered by strong chip sector performance, while challenges in the software sector tempered broader market gains. Economic data releases and Federal Reserve insights remain pivotal as investors navigate evolving market dynamics, emphasizing the importance of upcoming earnings reports and inflation indicators in shaping future market trends.

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