On Monday, strong performance was enjoyed by both, the S&P 500 and Nasdaq Composite. It marked consecutive victories as Wall Street bounced back from a challenging week which was driven by an increase in chipmakers.
A growth of 0.55% was observed in the broad market index which eventually finished at 5,975.38. In contrast, the Nasdaq Composite ended the day at 19,864.98 after witnessing a growth of 1.24%. The Dow Jones Industrial Average lagged behind the increases and dripped 0.06% before settling at 42,706.56.
After rising for three days in a row, Nvidia saw a 3.4% jump, hitting a record high. Broadcom also had a growth of about 1.7% while Micron Technology grew by 10.5%. A significant rise of over 3% was experienced by the VanEck Semiconductor ETF (SMH) as well.
Sam Stovall, chief investment strategist at CFRA Research stated, “The market seems to be quite optimistic about technology at the moment, anticipating earnings growth of 20% this year compared to 12.8% for the overall market, however, valuations do seem a bit stretched. This sector is unlikely to see gains driven by P/E multiples alone; instead, it will need to rely on organic earnings growth.”
Stovall also predicted “increased volatility” this year because of high valuations and earning forecasts. Besides this, possible shifts in interest rate expectations and the impact of a new presidential administration are also the reasons why Stovall made his predictions.
He further noted that the third year of a bull market has proven to be more difficult by referring to data dating back to World War II. A report from the Washington Post further fueled market optimism on Monday. The report indicates that President-elect Donald Trump’s tariff strategy would be more limited than previously thought focusing only on important imports.
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