©Portal. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 7, 2022. Portal/Brendan McDermid
By Stephen Culp
NEW YORK (Portal) – Wall Street closed sharply higher on Monday, fueled by rising tech stocks, as investors kicked off a profitable week with renewed enthusiasm for market-leading momentum stocks that took a beating last year.
All three major stock indices extended Friday’s gains, with the tech-heavy Nasdaq leading the field, driven by semiconductor stocks.
“[Chips are]a group that’s been depressed, so I’m not too surprised,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “We’re going to see revenue from these companies over the next few weeks and that’s where the rubber will hit the road.”
“It’s a group that was ripe for a rebound.”
The session marks a calm before the storm in a week packed with high-profile earnings reports and back-end loaded with crucial economic data.
Investors are all but certain that the Federal Reserve will deliver a bite-sized rate hike next week, even as the Federal Reserve remains determined to tame the hottest inflationary cycle in decades.
“(Investors) are pretty sure they’re going to see lower rate hikes from the Fed, that we’re going to turn the corner on inflation and rate hikes,” Tuz added. “Equities can do well in this environment, especially the big growth stocks that are driving the market.”
According to CME’s FedWatch tool, financial markets have priced in a 99.9% chance of a 25 basis point hike in Fed interest rates at the close of next Wednesday’s two-day monetary policy meeting.
The rose 254.07 points, or 0.76%, to 33,629.56, the gained 47.2 points, or 1.19%, to 4,019.81, and the added 223.98 points, or 2.01%, to 11,364.41.
Of the 11 major S&P 500 sectors, all but energy ended in the green, with technology stocks posting the largest percentage gain, up 2.3% during the session.
The fourth quarter earnings season has entered into overdrive as 57 of the companies in the S&P 500 have released results. Of those, 63% have delivered better-than-expected gains, according to Refinitiv.
Analysts now expect fourth-quarter earnings for the S&P 500 to fall 3% year over year overall, nearly double the 1.6% annual decline earlier in the year, according to Refinitiv.
This week Microsoft Corp (NASDAQ:) and Tesla (NASDAQ:) Inc, along with a flurry of heavy hitting industrials including Boeing (NYSE:) CO, 3M Co, Union Pacific Corp (NYSE:), Dow Inc and Northrop Grumman Corp ( NYSE:) is expected to release quarterly results.
The Philadelphia SE semiconductor index rose 5.0%, its biggest one-day gain since November 30, after Barclays (LON:) upgraded the sector to overweight from equal weight.
Tesla rose 7.7% after Chief Executive Elon Musk took a stand in his fraud case related to a tweet saying he had support to privatize the electric carmaker.
Baker Hughes Co missed quarterly earnings estimates on inflationary pressures and ongoing disruptions from Russia’s war in Ukraine. Shares of the oilfield services company fell 1.5%.
Cloud-based software company Salesforce (NYSE:) Inc rose 3.1% after it was announced that activist investor Elliot Management Corp has taken a multi-billion-dollar stake in the company.
Spotify Technology SA (NYSE:) joined the growing list of tech-related companies to announce upcoming job cuts and shed 6% of its workforce as rising interest rates and the looming possibility of a recession continue to weigh on growth stocks. Shares of the music streaming company rose 2.1%.
On the economic front, the US Commerce Department is expected to release its first “forward-looking” estimate of fourth-quarter GDP on Thursday, which analysts expect will land at 2.5%.
On Friday, the wide-ranging Personal Consumption Expenditures (PCE) report is expected to provide insight into consumer spending, income growth and most importantly, inflation.
Rising issues predominated on the NYSE at a 2.77 to 1 ratio; on the Nasdaq, a 1.73 to 1 ratio favored movers.
The S&P 500 posted 11 new 52-week highs and no new lows; the Nasdaq Composite posted 82 new highs and 19 new lows.
Volume on US exchanges was 11.99 billion shares, compared to the average of 10.62 billion over the past 20 trading days.