US Stocks Rally to New Records on Technology Sector Gains

U.S. stocks surged to new record highs on Monday, driven by strong gains in the technology sector. The S&P 500 climbed 0.8%, surpassing its previous all-time high set just days ago. The Nasdaq composite also reached a new record, rising 1%. The Dow Jones Industrial Average added 0.5%, although it remains below its peak level.

Broadcom, building on its robust performance from the previous week, played a significant role in lifting the market alongside other technology companies benefiting from the artificial intelligence (AI) frenzy. These gains helped offset the increased pressure on the stock market caused by higher Treasury yields in the bond market.

Autodesk experienced a notable 7% jump, marking one of the largest gains in the market. An investment firm announced its intention to delay the software company’s annual meeting in order to nominate new directors for the board. Starboard Value, the investment firm, criticized Autodesk’s financial performance, while the company responded by stating that it would review Starboard’s suggestions but emphasized its successful strategy.

Super Micro Computer, a company specializing in server and storage systems used in AI and other computing, saw its stock surge by 8.2%, resulting in a staggering year-to-date gain of 221.5%. Chip company Broadcom also rose by 5.9%, following better-than-expected profit reports and the announcement of a 10-for-one stock split to increase affordability. Nvidia, another prominent AI player, executed a similar split.

The strong performance of Big Tech stocks, including Apple and Microsoft, contributed to the market’s upward trajectory. Investors, focusing on the positive outlook for these companies and easing inflation concerns, appeared to overlook challenges faced by lower- and middle-income Americans, among other issues.

While rising Treasury yields exerted pressure on the stock market, recent reports on inflation exceeding expectations had raised hopes of a potential interest rate cut by the Federal Reserve later this year. This week’s economic calendar for the United States is relatively light, with key reports including Tuesday’s update on retail spending and Friday’s preliminary look at business activity. Additionally, markets will be closed on Wednesday for the Juneteenth holiday.

Manufacturing in New York state, which has been adversely affected by the Federal Reserve’s efforts to control inflation, continued to contract, albeit at a slower pace than anticipated. The Fed aims to maintain high interest rates to slow down the economy and curb inflation, but it also seeks to cut rates before a recession occurs.

The bond market saw the yield on the 10-year Treasury rise to 4.27%, erasing some of the gains made last week. In stock markets abroad, European indexes stabilized after a tumultuous week, with France’s CAC 40 rising 0.9%. However, losses were observed in Asian markets, with Japan’s Nikkei 225 dropping 1.8%.

In other market news, GameStop experienced a 10.8% decline following its annual shareholder meeting. The stock has been subject to significant volatility driven by smaller investors’ enthusiasm. GameStop’s CEO, Ryan Cohen, announced a focus on cost-cutting measures, including a reduction in the number of stores.