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Nasdaq 100, Dow Jones, S&P 500 News: Record Highs as Semiconductor Stocks Ignite Tech Rally

By:
James Hyerczyk
Updated: Jul 10, 2024, 15:55 GMT+00:00

Key Points:

  • SE Semiconductor index hits record high, bolstered by Taiwan Semiconductor's 2.5% rise following strong Q2 revenue.
  • Market now prices 74% chance of September rate cut, up from 45% a month ago, boosting tech sector performance.
  • Widening gap between tech and other sectors suggests potential for rotation; traders should prepare for possible volatility
NASDAQ Index, SP500, Dow Jones Forecasts

In this article:

Tech Rally Drives Market to New Highs, Sector Divergence Widens

The Nasdaq and S&P 500 hit record highs on Wednesday, propelled by a robust tech sector rally. This upward momentum comes as investors await crucial inflation data and second-quarter earnings reports later this week.

At 15:28 GMT, the S&P 500 Index is trading 5595.84, up 18.86 or +0.34%. The Nasdaq 100 is at 18512.08, up 82.79 or +0.45% and the Dow Jones is trading 18512.08, up 82.79 or +-0.45%.

Daily NVIDIA Corporation

Semiconductor Stocks Surge

Nvidia jumped 1.3% to a three-week high, setting a positive tone for the semiconductor sector. Micron Technology, Advanced Micro Devices, and ON Semiconductor each gained about 1%. The SE Semiconductor index reached a record high, bolstered by Taiwan Semiconductor Manufacturing Co’s 2.5% rise following strong Q2 revenue. This semiconductor surge underscores the sector’s pivotal role in driving market gains.

Daily Alphabet, Inc

Tech Giants Maintain Momentum

Among the “Magnificent Seven,” Alphabet and Microsoft rose 1% and 0.5% respectively, while Apple climbed 1% to a record high. The S&P 500 Tech Index topped sectoral gainers, showcasing the sector’s dominance in the current market rally. This concentrated performance in mega-cap tech stocks has been a defining feature of 2023’s market gains.

Sector Performance Breakdown

  1. Technology: Leading the market with significant gains across semiconductor and software stocks, driven by AI optimism.
  2. Communication Services: Strong performance, buoyed by Alphabet’s rise and positive sentiment around digital advertising.
  3. Consumer Discretionary: Positive trend, supported by Amazon’s strength and improved consumer spending outlook.
  4. Financials: Mixed performance ahead of major bank earnings.
  5. Energy: Worst-performing sector, facing headwinds from global demand concerns.

Federal Reserve Outlook

Fed Chair Jerome Powell’s comments suggesting the U.S. is “no longer an overheated economy” boosted rate cut expectations. The market now prices a 74% chance of a September rate cut, up from 45% a month ago. This shift in sentiment has contributed to the tech sector’s outperformance.

Upcoming Market Catalysts

Investors await key inflation data, with CPI due Thursday and PPI on Friday. The second-quarter earnings season kicks off with major banks reporting Friday, testing the sustainability of the tech-led rally.

Market Forecast

The short-term outlook remains bullish, driven by tech sector strength and rate cut optimism. However, the widening performance gap between tech and other sectors suggests potential for rotation. Upcoming economic data and earnings reports will be crucial in determining whether the rally can broaden beyond tech or if sector divergence will persist. Traders should closely monitor these catalysts and be prepared for potential volatility as the market digests new information.

Technical Analysis

Daily E-mini Nasdaq-100 Index

E-mini Nasdaq-100 Index futures reach a new record high on Wednesday, further separating from the 50-day and 200-day moving averages. While the saying goes “the trend is your friend,” the current situation may indicate an overvalued market, suggesting a potential near-term correction.

If today closes lower, it will create a second bearish closing price reversal top in two out of three sessions. This pattern strongly suggests that investors are selling into rallies.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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