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Stock market today: Dow closes higher on strength in tech ahead of Fed meeting

Published 06/12/2023, 04:13 PM
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Investing.com -- The Dow made a strong start to the week Monday, as investors continued to pile into tech a day ahead of fresh inflation data and the Federal Reserve’s two-day meeting.

The Dow Jones Industrial Average gained 0.5%, or 189 points, and the Nasdaq rose 1.5%. The S&P 500 was up 1% to notch a 13-month high.

Apple Inc (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOGL) led the climb in big tech as investors continued to pile into tech just days ahead of the Fed’s decision on Wednesday, when the central bank is likely to stand pat on rates.

Inflation data on Tuesday, meanwhile, isn’t expected to alter the Fed’s decision, but may encourage the Fed to adopt a less hawkish stance should the data match expectations and show easing price pressures.

Should incoming data in June and July show that inflation is “coming down quite a bit,” then there's a “very good chance that we finished raising rates for this cycle,” Eric Green, Chief Investment Officer at Penn Capital Management, said Monday in an interview with Investing.com’s Yasin Ebrahim.

Chip stocks continued to ride the AI optimism, with Advanced Micro Devices Inc (NASDAQ:AMD) up 8% ahead of its investor day due Tuesday, when the chipmaker is likely to deliver updates on its data center and AI technology.

"It now appears more certain that AMD has established itself as the closest competitor to NVDA in the accelerator/AI hardware market with apparent traction now extending beyond supercomputing into hyperscale," Wedbush said after lifting its price target on the stock to $145 from $95.

Following the recent surge in stocks that pushed the S&P 500 into bull market territory -- defined as a 20% rise from a recent low -- some on Wall Street are making bullish calls on stocks, forecasting the recent rally in tech to broaden into other sectors.

"Prior episodes of sharply narrowing breadth have been followed by a catch-up from a broader valuation re-rating,” Goldman Sachs, lifting its year-end forecast on the S&P 500 to 4,500 points from 4,000 points.

Others agree and suggest value stocks are likely to become attractive again as the economy is on course for a soft landing.

"It looks like we’re heading toward a soft landing as long as the Fed doesn't overdo it,” Green said. “If that's the case, you want economically sensitive companies that tend to be more value-oriented consumer cyclicals," he added.

Consumer stocks also supported the broader-market melt-up, driven by a Carnival Corporation (NYSE:CCL)-led surge after JPMorgan upgraded the stock to Overweight from Neutral, citing signs of sustainable business strength.

In other news, Nio (NYSE:NIO) rose more than 8% after the Chinese EV maker cut its price on vehicles, and halted free battery swaps for new buyers as it looks to firm up its balance sheet.

In deal news, Nasdaq Inc (NASDAQ:NDAQ) fell nearly 12% after announcing a deal to acquire Adenza for $10.5 billion.

Novartis AG ADR (NYSE:NVS), meanwhile, said it agreed to buy biotech firm Chinook Therapeutics Inc (NASDAQ:KDNY) for up to $3.5B, sending the latter’s shares up nearly 60%

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