Wall Street experienced a surge on Monday, with Tesla leading the way as it soared on the back of optimism around artificial intelligence (AI). Investors eagerly awaited inflation data that was due later in the week. Tesla’s stock rallied almost 10% after receiving an upgrade from Morgan Stanley, which stated that the company’s Dojo supercomputer could potentially increase its market value by nearly $600 billion.
The positive sentiment extended to other megacap stocks, with Amazon seeing a 3% increase and Microsoft climbing 1%. Meta Platforms also recorded a 3.4% gain following a report that revealed the social media platform was working on a new and more powerful AI system.
Investors are closely monitoring the upcoming release of the August consumer price index (CPI) data, scheduled for Wednesday. This data will provide valuable insights into how close the Federal Reserve may be to ending its interest rate hike campaign. Additionally, producer price data is set to be released on Thursday, adding further anticipation to the market.
The New York Fed’s survey indicated that overall views on inflation among Americans remained relatively unchanged in August. The survey participants predicted higher costs for housing and food, but expressed dimmer expectations for their personal financial health.
Greg Bassuk, the CEO of AXS Investments in New York, analyzed the situation, suggesting that the positive sentiment stemmed from optimism that the August inflation numbers would align with expectations. As a result, he believes the Federal Reserve may distance itself from further rate hikes.
Wall Street experienced weekly losses on Friday due to concerns over sticky inflation and the likelihood of higher interest rates persisting, fueled by an increase in oil prices and stronger-than-expected economic data. The CME FedWatch Tool currently indicates a 93% chance of the central bank maintaining its interest rates during its September meeting, with a 57% chance of a pause in November.
At the sector level, nine out of the 11 S&P 500 indexes recorded gains. The consumer discretionary sector topped the list with a 2.55% increase, closely followed by a 1.16% gain in communication services. Overall, the S&P 500 climbed 0.63% to 4,485.51 points, the Nasdaq gained 1.08% to 13,910.83 points, and the Dow Jones Industrial Average rose 0.25% to 34,662.93 points.
Qualcomm experienced a 4% advance after signing a new deal with Apple for the supply of 5G chips to the tech giant until at least 2026. However, other chipmakers, including Nvidia, saw declines.
Hostess Brands saw a significant jump of 19% following the announcement that J.M. Smucker plans to acquire the Twinkies-maker in a $5.6 billion deal.
In terms of market activity, advancing issues outnumbered falling ones within the S&P 500 by a ratio of 1.7 to one. Throughout this session, the S&P 500 achieved 12 new highs and 11 new lows, while the Nasdaq recorded 29 new highs and 156 new lows.
As the road ahead unfolds, investors remain cautiously optimistic, observing market indicators and data releases for clues on the direction of the Federal Reserve’s interest rate policies. The coming weeks will shed further light on the impact of inflation, influencing the decisions of market participants and shaping Wall Street’s future performance.