US stocks eked out small gains on Monday to renew their record levels with Nvidia Corp. hitting a fresh high, as investors prepare for a swath of corporate earnings this week while monitoring developments in the Strait of Hormuz. A gauge of chip stocks finished lower after a historic run.
The S&P 500 Index closed 0.1% higher in New York extending its advance after a four-week rally, as Nvidia shares rose 4%. The market leadership was narrow with only three out of 11 sectors in the green. The tech-heavy Nasdaq 100 Index finished nearly unchanged. Brent crude rose 3% to around $108 per barrel while the Cboe Volatility Index hovered at 18.
Wall Street's biggest technology stocks, which have helped power the S&P 500 Index's 10% gain this month, are set to release their financial results this week. Amazon.com Inc., Alphabet Inc., Meta Platforms Inc. and Microsoft Corp. are due to report on Wednesday followed by Apple Inc. a day later. All told, these companies represent a quarter of the S&P 500 Index's market capitalization.
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"We've had eight consecutive quarters of double-digit earnings growth in the US market," said Kristen Bitterly, head of wealth at work at Citigroup Global Markets. "If that sustains, then certainly this investment is going to be sustained, we'll see the market climb higher."
Aside from Nvidia and Micron Technology Inc., most semiconductor stocks took a breather after their unprecedented run. The Philadelphia Stock Exchange Semiconductor Index, known as the SOX, fell 1%, snapping its record 18th-straight session of gains that were fueled by corporate earnings optimism and the resumption of the artificial intelligence trade.
The gauge of US-listed chip stocks was dragged down by Marvell Technology Inc. after its unit Celestial AI cancelled purchase orders to Poet Technologies Inc., triggering a 47% wipeout in the latter. Qualcomm Inc. shares finished higher, although they narrowed an earlier advance sparked by speculation the company is working with OpenAI to develop smartphone processors.
The latest financial results from some of US hyperscalers this week could provide more clues to the direction of their rally.
"What we have seen is that the earnings story is simply there for the AI trade," said Lori Calvasina, RBC head of US equity strategies, adding that she doesn't see any residual damage coming out of the Iran war "hitting the earnings of the AI and tech trade that much" while materials, industrials, and consumer discretionary and consumer staples may be affected.
Meanwhile on the geopolitical front, Iran's Foreign Minister Abbas Araghchi told Russian President Vladimir Putin that Tehran is committed to strengthening the country's partnership with Moscow. Araghchi's Russia visit came after Axios reported on Sunday that Iran has given the US a new proposal to reopen the Strait of Hormuz and end the war that includes postponing nuclear negotiations. The plan also calls for extending the ceasefire, which appeared to be in limbo after President Donald Trump canceled a planned trip to Pakistan by two of his main envoys.
ALSO READ: A New Opening? Iran FM Says Considering Trump Team's 'Request' For Talks
"The market appears to be reducing its reaction to US/Iran headlines with the outcome trending to a short-term deal followed by more detailed negotiations," JPMorgan head of global market intelligence Andrew Tyler wrote in a note to clients.
While the US stock benchmark finished at an all-time high last week, there were signs of caution. Volumes remained low and the market breadth was narrow with tech stocks leading the gains. Goldman Sachs prime brokerage desk said hedge funds were using the US equity rally to reduce risks.
"Markets have recovered to new all-time highs while seemingly ignoring continued geopolitical risks that abound and this has been done largely on the back of positive earnings revisions and expectations," said Walter Todd, president and chief investment officer at Greenwood Capital Associates. "Any cracks that emerge in this outlook as the largest companies report in coming weeks pose a significant risk to market momentum."
Later this week, the Federal Reserve is expected to hold rates steady in its latest interest-rate decision on Wednesday, while a Senate Banking Committee is set to vote on Kevin Warsh's nomination as Fed Chair. Warsh is expected to be confirmed as Jerome Powell's successor, whose term ends on May 15.
"This week's Fed meeting is likely to be a non-event," said Luis Alvarado, co-head of global fixed income strategy at Wells Fargo Investment Institute. "Rates are firmly on hold, and the Fed will stay laser focused on inflation risks tied to energy, geopolitics, and supply shocks."
In single-stock moves, Apple shares dropped more than 1% after speculation about Qualcomm's development of smartphone processors with OpenAI. Domino's Pizza Inc. sank after the company reported revenue for the first quarter that missed the average analyst estimate. Organon & Co. surged 17% as Sun Pharmaceutical Industries Ltd. has lined up a short-term loan to help finance its $12 billion acquisition of the New York-listed healthcare company.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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