S&P500 and Dow Jones: Broadcom Lifts Tech Stocks as Industrial Average Slips

Chip Stocks Led S&P and Nasdaq Higher

The S&P 500 Index and Nasdaq Composite Index are trading higher at the mid-session Monday. The Dow Jones Industrial Average touched a fresh intraday record before slipping negative. Broadcom’s extended chip supply deal with Apple through 2031 pulled semiconductors off a two-session slide and the technology sector followed.

One sector carried the session. Chips ran after the Broadcom announcement and the rest of the market either tagged along or sat out. The Dow could not hold its record and gave back the early gains before the afternoon. Earnings season starts later this week and Wednesday’s Fed minutes follow.

Daily S&P 500 Index (SPX) Technical Analysis

At the mid-session on Monday, the S&P 500 Index is trading higher. The index is trading on the strong side of a short-term retracement zone at 7474.57 to 7429.38 and the 50-day moving average at 7402.74, giving it a solid upside bias.

Today’s rally has put the benchmark index in a position to challenge the June 15 main top at 7577.93. Taking out this top will weaken the previously bearish chart pattern, setting up the market for a possible test of the all-time high at 7620.90 later this week.

The key support level is the 50-day MA. A break through this level will have traders targeting swing bottoms at 7294.18 and 7237.85. These support levels are the last barriers before the major support zone at 6968.90 to 6815.03 and the 200-day MA at 6947.55.

Daily Nasdaq Composite Index (IXIC) Technical Analysis

The Nasdaq Composite is higher at the mid-session on Monday after recapturing the 50-day moving average at 25943.14, making it new support. The challenge for buyers has now shifted to the short-term retracement zone at 26085.30 to 26346.05.

Overcoming the short-term retracement will indicate the buying is getting stronger with the next target the secondary lower top at 26788.62. Taking out this level will put the market in a position to challenge the record top at 27190.21.

There are downside risks if the 50-day moving average at 25942.98 fails as support. The first is the minor bottom at 25630.51. A failure to hold this level will shift momentum to the downside with the main bottoms at 25014.96 to 24980.38 the next two major targets. These are the last two support levels before a full-blown correction into the long-term retracement zone at 23940.23 to 23173.24 and the 200-day moving average at 23721.90.

Daily Dow Jones Industrial Average (DJI) Technical Analysis

The Dow Jones Industrial Average posted a new record high at 53052.70 earlier in the session on Monday before pulling back slightly. The early move reaffirmed the uptrend.

Minor support is 51614.74 and 51301.77. This is followed by the 50-day moving average at 50623.39 and the main swing bottom at 49909.07.

With the blue-chip average in the midst of a prolonged rally in terms of price and time, and no visible resistance, the focus for traders at this time is the chart pattern. Higher-highs and higher-lows will keep the uptrend intact, but the biggest concern should be a closing price reversal top. That brings the focus into the close to last Thursday’s close at 52900.08.

Broadcom Pulled Chips Off a Two-Session Slide

Broadcom jumped 4% after extending its chip supply partnership with Apple through 2031. The Philadelphia Semiconductor Index gained 3.8% on the session and the S&P 500 information technology sector advanced 1.9%. The deal gave the sector a reason to bounce and buyers did not wait. One stock, one announcement, and the entire chip complex reversed.

SK Hynix, the South Korean memory chip maker, begins trading on the Nasdaq later this week.

Rate Odds Keep Falling and ISM Changed Nothing

The Institute for Supply Management reported non-manufacturing PMI at 54.0 last month, matching expectations. No surprise and no reaction. Last week’s payrolls miss is still working through rate pricing. CME FedWatch shows a 23% chance of a July rate hike, down from 30% a week ago. Wednesday’s FOMC minutes will get attention but the payrolls number already did the work on rate expectations.

Stocks in the News

Microsoft fell 1.6% after cutting roughly 4,800 jobs, about 2.1% of its workforce, while AI spending continues to climb. O’Reilly Automotive dropped 6.5% on reports it submitted a cash offer for Genuine Parts, which also traded lower. SpaceX edged down ahead of its Nasdaq-100 addition on Tuesday.

What to Watch

Earnings season is the test this week. Delta Air Lines and PepsiCo report and the results will show whether the rotation into healthcare, industrials, and financials has legs or fades without earnings to back it up. Wednesday’s Fed minutes are the other event but the market has already priced July out. The minutes would need a hawkish surprise to change anything.

The S&P 500 is testing the June main top with the Nasdaq back above the 50-day moving average and the Dow pulling back after a fresh record. All three are at levels where follow-through this week confirms the move or sets up a reversal.

More Information in our Economic Calendar.