U.S. stock markets closed higher on Monday after a disappointing last week. Sector rotations continued as this time market participants’ preferences once again shifter toward technology stocks. The second-quarter 2024 earnings results were also positive. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) was up 0.3% or 127.91 points to close at 40,415.44. Notably, 17 components of the 30-stock index ended in positive territory while 13 in negative zone.
The tech-heavy Nasdaq Composite finished at 18,007.57, climbing 1.6% or 280.63 points due to strong performance by technology behemoths. The tech-laden index closed above the crucial 18,000 level for the first time since Jul 16.
The S&P 500 gained 1.1% to finish at 5,564.41, marking its best day since Jun 5. Ten out of the 11 broad sectors of the broad-market index ended in positive territory, while one in negative zone. The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY), the Industrials Select Sector SPDR (XLI) and the Real Estate Select Sector SPDR (XLRE) advanced 2.4%, 1.1%, 1% and 1%, respectively.
The fear-gauge CBOE Volatility Index (VIX) was down 9.8% to 14.91. A total of 10.95 billion shares were traded on Monday, lower than the last 20-session average of 11.37 billion.
Technology Stocks Regain Momentum
Wall Street has been witnessing an impressive rally for the past 18 months. However, the rally was so far primarily driven by technology stocks, buoyed by massive application of generative artificial intelligence (AI) worldwide.
The release of weaker-than-expected inflation data, several soft key economic data and the Fed Chairman’s recent dovish comment on interest rate cut, have skyrocketed market participants’ expectation of a 25-basis point rate cut in September. Investors are also anticipating at least two rate cuts by the end of 2024.
Following these developments, investors preference has shifted in July from overvalued technology stocks to beaten-down rate-sensitive cyclical sectors like industrials, financials, materials, energy and small-cap stocks. Over the past 18 months, shares of several AI-centric stocks have soared three to four times. Sector rotations in July have made the ongoing rally more broad-based.
However, on Jul 22, investors’ preferences once again shifted to technology stocks led-by NVIDIA Corp. NVDA. Reuters reported that NVIDIA opens new tab is working on a version of its new flagship AI chips for the China market that would be compatible with current U.S. export controls.
Following the news, shares of NVIDIA surged 4.8%. NVIDIA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Positive Earnings Results
IQVIA Holdings Inc. IQV came out with quarterly earnings of $2.64 per share, beating the Zacks Consensus Estimate of $2.58 per share. This compares to earnings of $2.43 per share a year ago. These figures are adjusted for non-recurring items. IQVIA posted quarterly revenues of $3.81 billion, surpassing the Zacks Consensus Estimate by 0.69%. The year-ago revenues were $3.73 billion.
Truist Financial Corp. TFC came out with quarterly earnings of $0.91 per share, beating the Zacks Consensus Estimate of $0.84 per share. This compares to earnings of $0.95 per share a year ago. These figures are adjusted for non-recurring items. Truist Financial posted quarterly revenues of $4.97 billion, surpassing the Zacks Consensus Estimate by 1.89%. This compares to year-ago revenues of $5.92 billion.
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