By Carolina Mandl and Bansari Mayur Kamdar
(Reuters) – Wall Street’s main indexes climbed on Monday as investors bet on sectors beyond technology in a week filled with earnings reports and a Federal Reserve meeting.
All eyes will be on Microsoft, Google-owner Alphabet and Meta Platforms this week, whose earnings will show whether their stocks justify sky-high valuations.
The tech-heavy Nasdaq Composite Index has rallied 34% so far this year, outperforming its peers as rate-sensitive megacap growth companies rose on optimism about an end to the Fed’s tightening cycle and artificial intelligence.
The Nasdaq lagged other major indexes as investors looked to non-tech stocks for bargains.
“What you’re seeing now is people broadening the breadth of the market,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research. “People are starting to maybe take some profits and invest in other parts of the markets that they might see a little bit better bargain.”
Helping the Dow notch its longest winning streak in over six years, Chevron gained 2.73% as the oil giant posted upbeat preliminary quarterly earnings over the weekend.
As of Friday, second-quarter earnings are expected to decline by 7.9%, according to Refinitiv data.
The Fed is expected to raise interest rates by 25 basis points at its policy-making meeting on Wednesday.
A majority of economists polled by Reuters expect this to be the last hike of the current tightening cycle, after data this month showed signs of disinflation.
The Dow Jones Industrial Average rose 203.39 points, or 0.58%, to 35,431.08, the S&P 500 gained 20.72 points, or 0.46%, to 4,557.06 and the Nasdaq Composite added 23.99 points, or 0.17%, to 14,056.79.
Nine of the 11 major S&P 500 sectors rose, led by a 2.28% gain in energy stocks.
Toymaker Mattel rose 1.99% as the “Barbie” movie set a record as the biggest domestic debut of 2023.
AMC Entertainment jumped 36.05% after a judge blocked the theater chain’s stock conversion plan that risked diluting investors’ holdings in the company. AMC’s preferred shares fell 2.72%.
Exchange operator Nasdaq trimmed the weight of a handful of companies that make up close to half of the Nasdaq 100 to address “over-concentration” in the benchmark.
Meanwhile, business activity slowed to a five-month low in July, dragged down by decelerating service-sector growth, a survey showed.
Advancing issues outnumbered decliners on the NYSE by a 1.87-to-1 ratio; on Nasdaq, a 1.05-to-1 ratio favored decliners.
The S&P 500 posted 19 new 52-week highs and one new low; the Nasdaq Composite recorded 47 new highs and 76 new lows.
(This story has been refiled to add a dropped word in the headline)
(Reporting by Carolina Mandl, in New York, Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Shounak Dasgupta, Anil D’Silva and Richard Chang)
