U.S. equities started the third quarter on a positive note, buoyed by expectations of continued artificial intelligence-driven gains and hopes for potential interest rate cuts. The Dow Jones Industrial Average edged up 0.1%, the S&P 500 advanced 0.3%, and the Nasdaq Composite climbed 0.8% in Monday’s trading session. This uptick follows a mixed performance at the end of the second quarter, where each index saw losses on Friday.
Tesla (TSLA) led the gainers with a 6.1% increase ahead of its quarterly delivery report expected on Tuesday. Boeing (BA) also made significant gains, rising 2.6% after finalizing a deal to reacquire parts supplier Spirit AeroSystems (SPR). In contrast, Carnival (CCL) and Norwegian Cruise Line (NCLH) were among the notable decliners, both falling more than 5% due to concerns over Hurricane Beryl disrupting Atlantic Ocean voyages and signaling a potentially active hurricane season.
Looking ahead, market analysts are cautious about the S&P 500’s tech-heavy composition and the sustainability of chipmaker stocks, which have been pivotal in this year’s gains. While the technology sector continues to dominate, weakness in other sectors was evident as six out of eleven S&P 500 sectors lost value in the second quarter.
Investors are also keeping a close watch on Federal Reserve signals regarding interest rate cuts, with economic data guiding their decisions amidst inflation concerns. Amidst a light economic calendar due to the July 4th holiday, all eyes are on the upcoming monthly jobs report set to release later this week.
Bond markets reflected this cautious optimism with Treasury yields rising, with the 10-Year reaching its highest level in three weeks at 4.47%.
In individual stock movements, Tesla’s surge was driven by anticipation of robust second-quarter delivery numbers, contrasting with GameStop’s (GME) decline due to investor reactions over legal challenges and shifting investments by key figures like Keith Gill.
Overall, the start of the third quarter suggests a cautious yet optimistic tone among investors, navigating through mixed signals in the broader market landscape.
