Stocks rose at the start of the week ahead of Wednesday’s market holiday, with the S&P 500 (SPX), Nasdaq Composite (NDAQ), and Nasdaq-100 (NDX) posting new record highs. For the S&P 500, Tuesday marked the 31st record reached so far this year. The Nasdaq Composite closed higher for the seventh consecutive trading day, its longest winning streak since December.
This week’s rally was led by semiconductors, with NVIDIA (NVDA) at the helm. The surge in the shares of the AI poster child has propelled NVIDIA’s market capitalization above that of Microsoft (MSFT), making it the most valuable company in the world.
The chip design leader’s rally was supported by positive news from its peers in the industry, as well as by prospects of the world’s largest technology ETF significantly upping holdings of its stock. The Technology Select Sector SPDR Fund (XLK) will rebalance this week to adjust its holdings to the composition of the S&P Dow Jones Technology Select Sector index, which it mimics.
After NVIDIA’s ~180% surge year-to-date and its market cap more than doubling, the ETF will have to buy billions of dollars worth of shares to bring the chipmaker’s weight to around 21%, roughly matching that of Microsoft, and dumping about the same amount of Apple’s (AAPL) stock. Most of the market outside the IT sector saw moderate action, with the Consumer Discretionary stocks weighed down by the Retail Sales report which showed a slower-than-anticipated rate of increase last month. According to analysts, consumers began to feel the negative impact of elevated inflation and higher interest rates; they project that the weakness in discretionary spending categories will continue at least into early next year.
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