By David French
(Reuters) -Wall Street’s three benchmarks ended higher on Monday as investors returned to mega-cap growth stocks, helping both the index and index recover from their worst weekly performance since April.
The price was also back in positive territory, breaking a two-session skid since hitting an all-time high last Wednesday.
Megacaps Alphabet (NASDAQ:), Meta Platforms (NASDAQ:) and Tesla (NASDAQ:) all rose between 2.2% and 5.1% after being major market hurdles last week.
Nvidia (NASDAQ:) also rose 4.8% after Reuters reported that the artificial intelligence chip leader was working on a version of its new flagship AI chips for the Chinese market that would comply with current US export controls.
The Information Technology Index rose 2%, surpassing sectoral gainers and snapping a four-day losing streak.
“We think today’s move probably has more to do with a recovery from last week’s sales than anything else,” said Jason Pride, head of investment strategy and research at Glenmede.
Chief among the other factors occupying traders’ attention was a reexamination of the state of presidential election play, after US President Joe Biden announced his withdrawal and Vice President Kamala Harris’ candidacy for the November elections on Sunday had approved.
Biden’s departure could prompt investors to call off trades on bets that a victory for Republican Trump would increase U.S. fiscal and inflation pressures. But some analysts said markets could benefit from a greater chance of divided government under the next administration.
Online betting site PredictIt showed the price for a Donald Trump win falling 4 cents to 60 cents, while the price for a Harris win rose 12 cents to 39 cents.
Trump-linked stocks were mixed Monday, with Trump Media & Technology Group down 0.8%, while software company Phunware gained 4%.
After digesting the news of Biden’s withdrawal, investors will now look for answers to key questions, including who will join Harris on the Democratic presidential ticket and to what extent the vice president will deviate from the platform where Biden headlined on wax.
This element of uncertainty is present alongside traders’ fears about quarterly earnings, including those of two of the so-called Magnificent Seven companies – Alphabet and Tesla – on deck this week.
The results will test whether the recent rally in high-momentum top stocks is sustainable and whether the move into underperforming sectors will continue.
“We’re seeing the market starting to price in a bit of an accelerating series of rate cuts, and that’s leading to a bit of a shift in leadership to favor smaller stocks and move away from the focus on the largest tech companies. ”, said Glenmedes Pride.
“Obviously it looks a little different today, but it’s still a trend in the background.”
The S&P 500 gained 59.41 points, or 1.08%, to 5,564.41, while the Nasdaq Composite climbed 280.63 points, or 1.58%, to 18,007.57. The Dow Jones Industrial Average rose 127.91 points, or 0.32%, to 40,415.44.
Cybersecurity company CrowdStrike (NASDAQ:) fell 13.5% and extended losses after a software update from the company led to Friday’s global technical outage.
Delta Air Lines (NYSE:) fell 3.5% after canceling more than 600 flights as it struggled to restore operations following the outage.
Verizon Communications (NYSE:) fell 6.1% after a second quarter revenue loss.
Mattel Inc (NASDAQ:) rose 15.1% after Reuters reported that the toy manufacturer had been approached by takeover company L Catterton with a takeover bid.
Volume on U.S. exchanges was 10.95 billion shares, compared to the full-session average of 11.37 billion over the past 20 trading days.
