SPX: S&P 500 Logs Yet Another Record Ahead of Fed Decision – Froth or Not?

Broad-based index closed above 6,600 for the first time ever. Its tech-heavy peer also didn’t miss the opportunity to score another one.

🎯 S&P 500, Nasdaq Hit ATHs

• The S&P 500 index (SPX) closed into fresh record territory to kickstart the trading week. The Wall Street darling pushed above 6,600 for the first time in history, adding 0.5% on the day.
• Its tech-loaded peer wasn’t going to miss this. Technology shares surged with AI plays in the spotlight, lifting the Nasdaq Composite IXIC by nearly 1% to 22,348.75 points.
• Fast facts: it was the S&P 500’s 25th record closing high of the year, while the Nasdaq enjoyed its 26th record close. Apparently, these two are moving hand in hand. But how much of that is actual fundamentals and how much is froth?

📢 What’s Behind the Pump?

• The always-relevant response is “It depends.” On the one hand, the earnings seasons wrapped up with much fanfare and excitement with Nvidia NVDA confirming once again that the AI bonanza is very much alive.
• Let’s not forget Oracle ORCL. The software veteran said it’s signed a massive $455 billion backlog of work. But $300 billion of that is going to OpenAI (i.e. not much revenue diversification there).
• What’s also buoying shares higher is the keenly-anticipated Fed decision. The Federal Reserve is meeting today and tomorrow for the regular interest rate update. And markets are pricing in a 0.25% rate cut. Big if true.

🤝 Winners and One Loser

• What else happened Monday? Alphabet GOOGL surged 4.5% and joined the $3 trillion club, becoming only the fourth company in the world to cross the milestone. Every member of the Magnificent Seven finished in the green beside Nvidia.
• Nvidia slipped under the flatline after China’s market regulator said the chip maker violated the country’s anti-monopoly law when it acquired Mellanox in 2020. The stock was lower by 2% at the deepest but later pared back most of the losses.
• Tesla TSLA was a big winner, up 3.6% (was up more than 8% at the peak) after filings showed Elon Musk splurged $1 billion to get his hands on 2.57 million Tesla shares. It was his first stock purchase since 2020.