Investors started an earnings-heavy week with a fresh enthusiasm for market-leading momentum firms that were hammered last year, which helped Wall Street close significantly higher on Monday.
The gains from Friday were maintained by all three major stock indices, with the tech-heavy Nasdaq leading the field thanks to semiconductor company prices (.SOX).
“I’m not too surprised,” said Peter Tuz, head of Chase Investment Counsel in Charlottesville, Virginia, “(Chips are) a group that’s been depressed.” The “rubber hits the road” when we witness these companies’ earnings over the course of the following several weeks.
This group was ready for a comeback, so to speak.
In a week filled with important economic data and high profile financial releases, the session is the quiet before the storm.
Investors are almost convinced that the Federal Reserve will conduct a modest interest rate increase the next week, despite the fact that it is still dedicated to containing the most intense inflationary cycle in decades.
Tuz said, “(Investors) are quite confident that they will see lesser rate hikes from the Fed and that we are turning the curve on inflation and interest rate hikes. Stocks can perform well in these atmospheres, particularly the market-leading large-growth stocks.
According to CME’s FedWatch tool, financial markets have priced in a 99.9% chance of a 25 basis point increase to the Fed funds target rate at the conclusion of its two-day monetary policy meeting next Wednesday.