U.S. stock markets closed higher on Monday after a choppy trading session supported by strong performance of chip stocks. Market participants were busy weighing weak economic data. The second quarter 2023 earnings of the major retailers are also in key watch list in order to gauge the magnitude of consumer spending. All the three major stock indexes ended in positive territory.
U.S. stock markets close higher after choppy trading session
The U.S. stock markets closed higher on Monday, but not without some volatility throughout the trading session. The Dow Jones Industrial Average (DJI) rose slightly to close at 35,307.63, marking its third straight positive closing. The Nasdaq Composite gained 1.1% or 143.48 points and finished at 13,788.33, due to strong performance of large-cap technology stocks. The S&P 500 also rose 0.6% to end at 4,488.72.
Chip stocks drive market performance
Chip stocks played a significant role in driving the market performance on Monday. Following weak economic data, yields on several key U.S. government bonds spiked on Friday, resulting in a sharp decline of several chip stocks’ share prices. However, this sector rebounded on Monday, with the VanEck Semiconductor ETF (SMH) up 3%. Stock prices of large-cap semiconductor stocks such as Micron Technology Inc. (MU) and NVIDIA Corp. (NVDA) surged 6.14% and 7.1%, respectively.
Q2 2023 earnings of major retailers in focus
Investors are closely watching the second quarter 2023 earnings of major retailers in order to gauge the magnitude of consumer spending. The earnings results so far have been mixed, with a decline of 9.5% in total earnings of the companies that have reported. However, the outlook given by these companies is better than expected. As of August 11, 457 S&P 500 companies have reported earnings results, with 79% surpassing EPS estimates and 65.2% outpacing revenue estimates.
Benchmarks show mixed performance, tech stocks lead the way
The three major stock indexes showed mixed performance on Monday, with the Dow Jones Industrial Average rising slightly, the Nasdaq Composite gaining 1.1%, and the S&P 500 rising 0.6%. Six out of 11 broad sectors of the S&P 500 ended in the positive zone while five finished in negative territory. The Technology Select Sector SPDR (XLK) advanced 1.6%, while the Utilities Select Sector SPDR (XLE) dropped 0.8%. Tech stocks led the way, with strong performance from large-cap technology stocks driving the gains in the Nasdaq Composite.
Weak economic data and rebounding chip stocks impact market
Market participants were busy weighing weak economic data on Monday, with the Department of Labor reporting that the producer price index (PPI) increased 0.3% month-over-month in July. Core PPI also increased 0.2% month-over-month, marking its highest increase since February. However, the University of Michigan reported a preliminary reading of consumer sentiment came in lower than expected for August. In addition, yields on several government bonds spiked, impacting the performance of chip stocks. However, chip stocks rebounded on Monday, driving the overall market performance.
Overall, U.S. stock markets closed higher on Monday, supported by the strong performance of chip stocks. Market participants were busy weighing weak economic data, and the second quarter 2023 earnings of major retailers are also in focus. Tech stocks led the way, with the Nasdaq Composite gaining 1.1%. The outlook for earnings results is better than expected, despite a decline in total earnings for companies that have reported. Investors will continue to closely watch these factors as they navigate the current market conditions.
Analyst comment
Positive news: U.S. stock markets closed higher after a choppy trading session, driven by the strong performance of chip stocks and led by tech stocks. The three major stock indexes ended in positive territory, with the Nasdaq Composite gaining 1.1%.
As an analyst, I expect the market to remain volatile as investors navigate weak economic data and closely watch the second quarter 2023 earnings of major retailers. Tech stocks are likely to continue driving the market, and investors will closely monitor the performance of chip stocks. Overall, cautious optimism may prevail as earnings results are better than expected despite a decline in total earnings.
