The S&P 500 and Nasdaq rose for the fourth straight session on Monday as investors braced for heavy mega-cap gains later this week and an update on the Federal Reserve’s interest rate policy.
Both indexes hit their highest levels in more than a week, marking the longest streak of gains since December.
A rally in a few mega-cap stocks did most of the heavy lifting for the S&P 500, with Apple, Microsoft, Alphabet, Meta and Broadcom pushing the benchmark to the top.
Apple, Meta, Microsoft and Tesla are scheduled to report quarterly results later this week, setting up a key test for a rally fueled by excitement around AI.
Investors will look for signs of tangible returns from spending on AI. Guidance is especially important amid concerns about high valuations in the tech sector, where even the slightest setback could prompt a rethink about AI trading.
“You’re going to see communications and technology trading well today ahead of a lot of the big corporate gains,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management in Charlotte, North Carolina.
“Generally speaking, investors are likely to be cautiously optimistic and looking forward to earnings season, as we are seeing higher corporate profits and an expanding economy.”
Of the 64 S&P 500 companies that reported earnings as of Friday, 79.7% beat analysts’ expectations, according to data compiled by LSEG.
The Dow Jones Industrial Average rose 313.69 points, or 0.64%, to 49,412.40, the S&P 500 rose 34.62 points, or 0.50%, to 6,950.23, and the Nasdaq Composite Index rose 100.11 points, or 0.43%, to 23,601.36.
Telecommunications services ended the day up 1.3%, the biggest gain among the 11 major S&P 500 industries, while consumer staples was the biggest laggard, down 0.7%. The biggest drag on the S&P 500 was Tesla, which ended down 3%. The S&P 500’s materials sector rose 0.3% as gold exceeded $5,000 an ounce for the first time, boosting stocks such as Newmont, which ended up 1.3%. Investors were also focused on the Fed’s meeting, which begins Tuesday and ends with a policy update Wednesday afternoon. Traders believe there is about a 97% chance the central bank will keep rates unchanged, according to CME Group’s FedWatch, but investors are hoping for clues about the future path of interest rates.
The decision could risk being overshadowed by new questions about the central bank’s independence, after the Justice Department launched an investigation into Fed Chairman Jerome Powell this month and President Donald Trump said he may soon select a new Fed chair. Among individual stocks, Intel’s shares fell 5.7% on Friday, after falling 17% on Friday, the steepest decline in about 18 months on the chipmaker’s outlook for lower-than-expected quarterly profits and sales. Meanwhile, JetBlue fell 3.8% as the airline industry grappled with the effects of massive disruptions to flight schedules caused by the massive winter storm that hit the United States. Shares of prison operators GEO Group and CoreCivic, which have contracts with U.S. Immigration and Customs Enforcement, fell sharply after U.S. Senate Democrats said they opposed funding for the Department of Homeland Security, which oversees ICE. The shooting death of 37-year-old nurse Alex Preti in Minneapolis on Saturday intensified the public backlash against President Trump’s immigration policies. GEO stock fell 9.3%, its biggest single-day loss since August, and CoreCivic fell 7%, its biggest decline since November. USA Rare Earths shares rose 7.9% after reports that the U.S. government will take a 10% stake in the mine as part of a $1.6 billion debt and equity investment package. Elsewhere, Coreweave rose 5.7% after Nvidia announced it would invest $2 billion in the cloud infrastructure company.
On the New York Stock Exchange, advancing issues outnumbered declining issues by a 1.37-to-1 ratio, with 631 new highs and 63 new lows. Declining issues outnumbered advancing issues on the Nasdaq by a 1.04-to-1 ratio, with 2,360 advancing issues and 2,465 declining issues.
18.41 billion shares were traded on U.S. exchanges on Monday, compared with the 20-day average of 17.6 billion.
(Reporting by Sinead Kalu in New York and Pranav Kashyap and Twesha Dixit in Bengaluru; Editing by Krishna Chandra Eluri and Matthew Lewis)
