Nasdaq hits record close on tech rally

New York — The Nasdaq surged to a record high close on Monday, while the S&P 500 approached its own record level, with both lifted by Nvidia and other technology stocks.

The benchmark S&P 500 reached just shy of its February 19 intraday record high after testing that level for much of last week, while the Dow Jones was weighed down by losses in financial and industrial stocks.

Nvidia was among the top boosts to the S&P 500 and Nasdaq for the day, surging 6.7% to a record after two analysts raised their price targets ahead of the chipmaker’s quarterly results on Wednesday.

In June, the Nasdaq became the first of the major Wall Street bourse to recoup its coronavirus-induced losses as several of its largest constituents, including Amazon  and Netflix, benefited from curbs on social activity.

“Tech is the only trade,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. “Things that were 10 years away on February 18 are here now: Distance learning, seeing your doctor via Zoom, ordering pharmaceuticals via the mail.”

Lowe’s and Home Depot each rose more than 2% ahead of their earnings later in the week. The two home improvement chains are expected to have received a bump to their quarterly sales from consumers looking to do minor repair work while spending more time at home.

The S&P 500 retailing index climbed 1.4%, with heavyweights Walmart  and Target  also set to report results this week.

“Earnings season in general has been much better than expected, but a big part of that is because the expectation has been so low,” said Willie Delwiche, investment strategist at Baird in Milwaukee.

Rackspace Technology jumped over 10% after Reuters reported Amazon is in early talks to invest in the cloud services provider.

As of Friday, 457 companies in the S&P 500 had posted results, of which 81.4% came in above dramatically lowered expectations, according to Refinitiv data.

Minutes of the Federal Reserve’s latest meeting, due on Wednesday, are expected to provide more insight into the central bank’s view of an economic recovery, while housing starts data is also on tap.

Caution is expected to seep into markets ahead of the November US presidential vote, as the election season kicks into higher gear with the Democratic National Convention, which runs from Monday through to Thursday.

The Dow Jones Industrial Average fell 0.31% to end at 27,844.91 points, while the S&P 500 gained 0.27% to 3,381.99.

The Nasdaq Composite climbed 1% to 11,129.73, its fifth closing high in August.

Seven of the 11 major S&P sectors rose, with technology providing the biggest support to the S&P 500 index.

Principia Biopharma  surged 9.3% to a record high after French health-care firm Sanofi said it would buy the company for about $3.7bn.

Reuters