U.S. stocks rose sharply on Monday, with the S&P 500 and Nasdaq reaching new record highs, largely due to Nvidia’s strong performance.
Investors are also preparing for major earnings reports from major banks, which could affect the stock market and give more insight into the economy’s performance.
- Nvidia’s strong performance and gains in other semiconductor companies pushed the S&P 500 and Nasdaq to new all-time highs.
- As major banks like Goldman Sachs, Citi, and Bank of America report their third-quarter earnings, these results are expected to impact investor confidence and the overall market direction.
- Mixed economic data has left investors unsure if the Fed will lower interest rates in November, with reports like retail sales expected to shed more light on the economy’s health.
Nvidia Drives Tech Stocks to New Highs
Nvidia, a major player in artificial intelligence (AI), continued its rise on Monday, increasing more than 2%.
The company’s stock is getting close to matching Apple’s market value, which shows how much investors believe in Nvidia’s role in the AI industry.
Since September, Nvidia has added around $780 billion in market value, even surpassing Microsoft as the second-most valuable company globally.
Other chip-making companies, such as ASML, Arm Holdings, and Applied Materials, also saw gains as the excitement around AI technology grew.
It’s evident that investors are interested in tech companies, especially those leading in AI development.
Bank Earnings Take the Spotlight
As the week progresses, attention is turning to earnings reports from major U.S. banks.
Last week, JPMorgan Chase and Wells Fargo reported strong earnings, lifting hopes for the broader market.
Banks like Goldman Sachs, Citi, and Bank of America will release their financial results this week, and investors will watch closely.
Morgan Stanley is also set to report midweek.
These bank earnings are especially important because they help determine if the stock market can keep rising.
So far, about 30 companies in the S&P 500 have released their earnings, and most have done better than expected, beating estimates by about 5%.
This success has helped support the stock market despite concerns about rising interest rates and other economic challenges.
Economic Uncertainty and Fed Rate Cuts
While investors are paying close attention to earnings, they’re also watching the Federal Reserve closely.
Some believe that recent job reports and inflation data mean the Fed won’t cut rates in November.
However, many investors are hopeful that interest rates will come down soon, which could boost the market even more.
Later this week, the data on retail sales will give more clues about the economy’s health.
Many investors remain concerned about the possibility of a “soft landing”—where the economy slows down without falling into a recession.
However, rising inflation could force the Fed to keep interest rates high longer, which might affect the stock market.
Tech Stocks and Dow’s Rise
Clearly, tech stocks are continuing to lead the market.
The Nasdaq rose 0.7%, while the S&P 500 gained 0.7% as well, continuing a strong performance this year—the best in nearly 30 years.
The Dow Jones Industrial Average also rose by more than 100 points, or 0.4%, with tech companies like Microsoft, Apple, and IBM driving those gains.
However, not all companies had a good day.
Boeing saw its shares fall due to concerns about its financial future, and Caterpillar’s stock dropped by 2% after a downgrade from Morgan Stanley.
Global Markets and Oil Prices
Meanwhile, oil prices dropped on Monday after China’s finance minister shared limited details about the country’s economic stimulus plans.
As you can imagine, this left investors uncertain, causing Brent crude and WTI oil prices to fall by more than $1.70 per barrel.
European stocks remained mostly unchanged in other global markets, with slight declines in the UK’s FTSE 100 and Germany’s Stoxx 600 index.
Also, Japan’s markets were closed for a holiday, while China’s stock market saw some gains following news of the country’s economic plans.
What’s Next?
As the S&P 500 reaches new highs, investors are looking ahead to more earnings reports from companies like Bank of America, Goldman Sachs, and Johnson & Johnson.
Other major reports, including retail sales and housing data, will also help investors understand the economy’s performance.
Although the market is on a strong upward trend, there are still concerns about inflation and rising interest rates.
The stock market has gained nearly 23% this year, marking one of its best performances since 1997.
With the bond market closed for Columbus Day, all eyes are on stocks as investors prepare for potential changes in the market.
