By Yasin Ebrahim
Investing.com – The Dow and S&P 500 rode a tech-infused rally to record highs Monday, supported by falling U.S. rates and rising semiconductor stocks that helped brush aside a slip in energy and financials.
The Dow Jones Industrial Average rose 0.53%, or 173 points, and closed at a record of 32,953.46. The S&P 500 closed up 0.63%, while the Nasdaq Composite was up 1.05%.
Chip stocks were in favor once again as Broadcom (NASDAQ:AVGO) and NXP Semiconductors (NASDAQ:NXPI) rallied on expectations the ongoing chip shortage will continue to boost prices, and ultimately support earnings growth. The iShares PHLX Semiconductor ETF (NASDAQ:SOXX) more than 2%. NXP was added to the S&P 500 on Friday, following the index's quarterly rebalancing.
"Chip supply should be tight this year given chipmakers’ conservative capex plans coupled with growth in demand as the global economy recovers," KB Securities said, according to report from Business Korea. "From 2Q21, the rise in DRAM prices should accelerate amid a supply shortage while NAND prices should reverse upwards (previously expected in 3Q21)."
The broader tech sector was also pushed higher by a fall in interest rates with just a day to go until the Federal Reserve Open Market Committee kicks off its two-day policy meeting.
The Fed is expected to leave rates and the pace of its $120 billion monthly bond-buying program unchanged on Wednesday, but investors will be closely watching for any clues the central bank is willing to act if rates rise at a disorderly pace.
"[T]he decision for additional action is unlikely in the coming weeks, let alone days. In other words, we do not expect any announcement of further yield curve control or an Operation Twist-style adjustment to policy at this week’s meeting," Stifel said in a note.
Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL) and Google-parent Alphabet (NASDAQ:GOOGL) were higher, while Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) were lower.
Value stocks were mixed as investors weighed a fall in financials and energy, but strength in industrials, with the latter supported by rise in airline stocks. Goldman Sachs (NYSE:GS), however, said that energy and financial still have room to grow despite strong gains already year to date.
"Our macro forecasts also suggest that two of the most quintessential value sectors [energy and financials] can still appreciate in coming months despite being the strongest recent performers in the market," Goldman Sachs said in a note.
There was a setback on the global vaccine rollout front, however, after several countries in the European Union, including Germany, paused use of the AstraZeneca (NASDAQ:AZN) vaccine on concerns about safety.
Airline shrugged off the vaccine news to move sharply higher on signs that more people are flying and booking trips in the U.S. United Airlines Holdings (NASDAQ:UAL), Delta Air Lines (NYSE:DAL) and American Airlines Group (NASDAQ:AAL) were higher, with the latter up more than 7%.
The Transportation Security Administration said that it screened 1.37 million people on Friday, the highest number of passengers it has seen on a single day since March 15 of last year.
In other news, AMC ended the day up 25% after as it began reopening theaters in Los Angeles on Monday, with the remaining 23 county theaters expected to be opened by Friday. The move comes after L.A. County said last week that it will be lowering restrictions to the second tier of California's Covid-19 reopening system, paving the way for movie theaters to reopen.