The Nasdaq and S&P 500 closed higher on Monday, recovering some losses as investors anticipate quarterly earnings from AI leader Nvidia, and Tesla jumped on the prospect of favorable policy changes from the incoming Trump administration.
Nvidia reports third-quarter earnings on Wednesday when investors will assess demand for chips and the sustainability of the AI euphoria that drove much of the market's rally this year.
The chip designer, which powered 20 per cent of the S&P 500's return over the past year, is expected to drive nearly 25% of its EPS growth in the third quarter, according to BofA Global Research. Nvidia's shares fell 1.3 per cent after a report said its new AI chips were overheating in servers.
"While Nvidia is the last of the Magnificent Seven to report, you've seen a nice broadening in earnings and attention," said Carol Schleif, chief investment officer at BMO Family Office. "It'll be noteworthy, but it doesn't feel like there's the same level of impetus around it as there was a quarter or two ago."
The Dow Jones Industrial Average fell 55.39 points, or 0.13 per cent, to 43,389.60, the S&P 500 gained 23.00 points, or 0.39 per cent, to 5,893.62 and the Nasdaq Composite gained 111.69 points, or 0.60 per cent, to 18,791.81.
Energy stocks led the S&P, popping 1.05 per cent, with consumer discretionary also rising 1.04 per cent as Tesla jumped 5.6 per cent following a Bloomberg report that members of President-elect Donald Trump's transition team were seeking to ease U.S. rules for self-driving cars. Industrial stocks were the biggest sectoral decliner.
CVS Health's shares gained 5.4 per cent after the health insurer said it would add four new members to its board in an agreement with Glenview Capital Management.
"I think a lot of specific sectors could be pretty volatile until we get more verbiage out of Trump's new picks later this month," Schleif said.
Stock indexes have shed some of the sharp gains that followed Trump's decisive victory, but Wall Street remains fairly well-placed as 2024 winds down.
Rising expectations that the Federal Reserve will slow the pace of policy easing and uncertainty over the impact of Trump's cabinet appointments led to the S&P 500 and the Nasdaq logging their worst weekly losses in more than two months last week.
With the key holiday shopping season set to commence, results from major retailers including Walmart, Lowe's Companies and Target will be closely watched this week to gauge the strength of the U.S. consumer.
Advancing issues outnumbered decliners by a 1.71-to-1 ratio on the NYSE where there were 159 new highs and 88 new lows.
On the Nasdaq, 2,158 stocks rose and 2,150 fell as advancing issues and decliners had a 1-to-1 ratio. The S&P 500 posted 29 new 52-week highs and 13 new lows while the Nasdaq Composite recorded 69 new highs and 265 new lows.
Volume on U.S. exchanges was 14.94 billion shares, compared with the 14.12 billion average for the full session over the last 20 trading days.