The S&P 500 climbed along with the Nasdaq Composite on Monday for back-to-back wins, as Wall Street rebounded from a losing week and chip makers rose.
The broad market index advanced 0.55%, and the Nasdaq Composite advanced 1.24%. The Dow Jones Industrial Average lagged behind, losing about 26 points, or 0.06%. Earlier in the session, the 30-share average rose as much as 383 points.
Chip stocks were among the big gainers after Foxconn posted record fourth-quarter earnings. Nvidia jumped 3.4%, closing at a record high after shares posted gains for three straight days. Broadcom gained about 1.7%, while Micron Technology advanced 10.5%. The VanEck Semiconductor ETF (SMH) jumped more than 3%.
“I think the market is pretty bullish on tech right now, expecting 20% earnings growth this year versus 12.8% for the market … but estimates really do seem restrictive,” said CFRA Research chief investment strategist Sam Stovall . “The group is unlikely to grow on P/E multiples, but will need to grow on organic earnings growth.”
Stovall expects “increased volatility” this year given expensive valuations, potential adjustments to interest rate forecasts and earnings projections, and the new presidential administration, reports SEEbiz. The third year of the bull market is also more challenging according to historical data going back to World War II, he added.
Market sentiment on Monday was also buoyed by a Washington Post report that said President-elect Donald Trump’s tariff plan would be narrower than expected, covering only critical imports. During his campaign, Trump called for “universal” tariffs of as much as 10%-20%. Shares of Ford and General Motors gained less than 1% and 3%, respectively, on optimism that Trump’s more restrained tariff policy would not spark a global trade war.
