Tech stock rally sends S&P and Nasdaq to record highs

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NEW YORK – The Nasdaq and S&P 500 headed to all-time highs on Monday, fueled by tech stocks as interest rates remain low, while investors awaited data on the US labor market due on Friday.

Big tech companies including Facebook Inc, Apple Inc , Amazon.com Inc and Nvidia Corp were among the biggest boosts to the S&P 500 and the Nasdaq.

Facebook gained over 4 per cent as a US judge granted the company’s motion to dismiss a Federal Trade Commission lawsuit.

The social media giant touched $1 trillion in market cap on Monday.

In contrast, cyclical sectors dropped sharply amid fears over a spike in Covid-19 cases across Asia. Financials, energy and airlines fell sharply. Technology led the biggest sectoral gains on S&P.

“It’s end of the quarter and investors may want to take some profits and rotate out of energy and stick with tech, which has been the winner,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

Stovall expects stocks should continue their near-term climb as investors await the new earnings season, in which -over-year earnings growth of S&P 500 companies is expected to top 60 per cent.

The S&P 500 on Friday logged its best weekly performance in 20 weeks, following a bipartisan agreement on a $1.2 trillion US infrastructure spending deal and waning concerns about a sooner-than-expected policy tightening from the Federal Reserve.

Both the S&P 500 and the Nasdaq hit a series of record highs last week. The tech-heavy Nasdaq’s 5 per cent gain in June is outpacing its peers as investors pile back into tech-oriented growth stocks on diminishing worries about runaway inflation.

Unofficially, the Dow Jones Industrial Average fell 151.56 points, or 0.44 per cent, to 34,282.28, the S&P 500 gained 9.88 points, or 0.23 per cent, to 4,290.58 and the Nasdaq Composite added 140.12 points, or 0.98 per cent, to 14,500.51.

“We believe with the Fed putting a realistic goal post, investors now have much more of a risk on mentality going into the second half of the year. A lot of these tech names have underperformed, while fundamentals were very robust going into the June quarter,” said Wedbush Securities analyst Daniel Ives.

With the S&P 500 up almost 14 per cent as the first half of 2021 draws to a close, activity in some areas of the market indicates concern over potential volatility, with some investors suggesting the market may be overdue for a significant pullback.

On the economic front, investor attention will be focused on consumer confidence data, a private jobs report and a crucial monthly report due later this week. Quarterly results from Micron Technology Inc and Walgreens Boots Alliance are also slated for this week.

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