Broader AI-linked and mega-cap tech stocks also lost ground as investors demanded stronger evidence that the heavy investments in the technology were tangibly boosting sales and profits.“We haven’t really seen a decline, just a lot of daily volatility, which implies the market is more at a crossroads waiting for some kind of bullish or bearish catalyst to… push (it) in a new direction,” said Sam Stovall, CFRA’s chief investment strategist.
Most megacap and growth stocks rose on the day, with Nvidia gaining 1.5% after the company said it signed a multi-year deal to sell Meta Platforms millions of its current and future AI chips.
Other megacaps also advanced. Amazon.com rose 1.6%, while Alphabet and Microsoft edged higher.
The S&P 500’s materials and energy indexes added 0.6% and 1.1%, respectively, recovering from the previous session’s losses. Conversely, declines in health care stocks and consumer staples limited gains, with retail giant Walmart down 1.3% from Thursday’s results.
The minutes of the US Federal Reserve’s January policy meeting, where it kept key interest rates stable, are expected at 2 p.m. Dutch time.
Traders estimate a roughly 63% chance of a rate cut of at least 25 basis points at the June Fed meeting, the first above 50%, according to CME’s FedWatch Tool.
The Personal Consumer Expenditure Report – the Fed’s preferred inflation gauge – will take center stage later this week and is expected to provide insight into inflation and how it could impact borrowing costs.
At 9:40 a.m. ET, the Dow Jones Industrial Average rose 127.97 points, or 0.26%, to 49,661.16, the S&P 500 added 16.43 points, or 0.24%, to 6,859.65, and the Nasdaq Composite gained 54.94 points, or 0.24%, to 6,859.65. 22,633.32.
On earnings-driven moves, shares of Analog Devices rose 3.8% after the chipmaker forecast second-quarter results above Wall Street estimates.
Global Payments rose 10.7% after the company expected adjusted annual profit that came in above expectations.
Moderna rose 5.7% after the U.S. Food and Drug Administration agreed to review its flu vaccine, reversing an earlier decision to reject the application.
Palo Alto Networks fell 9.3% after the cybersecurity company cut its annual profit forecast, while Cadence Design Systems rose 6.5% after the chip design software provider beat fourth-quarter revenue expectations.
Hard drive maker Western Digital plans to raise $3.17 billion by selling part of its stake in the former Sandisk through a secondary stock sale, which will send Sandisk shares down 1.6%.
Advancing issues outpaced declining issues by a 1.5-to-1 ratio on the NYSE and by a 1.23-to-1 ratio on the Nasdaq.
The S&P 500 recorded nine new highs and three new lows over the past 52 weeks, while the Nasdaq Composite recorded 33 new highs and 47 new lows.
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