AI enthusiasm has returned the market to growth

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Key points:

  • Alphabet shares rose after news of negotiations with Apple.
  • The communications services sector gained the most out of the S&P 500.
  • Traders reduced the likelihood of a rate cut in June from 71% to 51%.

On Monday, March 18, Wall Street’s major stock indices ended trading higher. A rebound in the tech-heavy Nasdaq index has boosted mega-cap stocks like Alphabet and Tesla. In addition, investors are looking forward to the meeting of the US Federal Reserve, which will take place this week.

Google’s parent company, Alphabet, had a significant impact on market growth following media reports that Apple was in talks to integrate the Gemini AI engine into the iPhone.

The Dow Jones Industrial Average rose 75.66 points, or 0.20%, to 38,790.43. The S&P 500 index added 32.33 points (0.63%) to reach 5,149.42 points. The Nasdaq Composite Index rose 130.27 points, or 0.82%, to 16,103.45.

How did the company’s shares perform?

The communications services sector posted the strongest gains among the 11 major S&P 500 sectors, rising nearly 3%. At the same time, the real estate and healthcare sectors showed the worst results.

Tesla shares led the S&P 500 in percentage gains, gaining 6.3%. This comes after the electric vehicle maker announced it would soon increase prices for its Model Y electric vehicles in the European market.

Nvidia shares rose 0.7% but closed well below their session high. Investors are focused on the company’s presentation of next-generation AI-based chips.

Boeing shares fell 1.5% after media reports said a subpoena had been issued to the aircraft maker in connection with the January 5 airborne explosion of a Boeing door plug.

Shares of Super Micro Computer gave up all of their previous gains and closed down 6.4%, becoming the top loser among the benchmark indexes for the day.

Focus on future Federal Reserve meeting

Higher-than-forecast inflation figures have prompted traders to revise their expectations for the timing and extent of interest rate cuts this year. According to the CME FedWatch Tool, the likelihood of a rate cut in June dropped from 71% to 51% in just one week.

If the Fed shows a hawkish stance at Wednesday’s policy meeting, it could have a negative impact on the stock market. At the same time, Goldman Sachs on Monday said that, due to higher-than-expected inflation figures, the bank has revised its forecast for 2024, reducing the number of expected interest rate cuts from four to three.


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