S&P 500 rises 0.7% as chip stocks rebound ahead of Fed minutes, earnings

The S&P 500 climbed for a second straight session Monday, with semiconductor stocks leading a broad rally as traders turned their focus to this week's Fed minutes and the start of Q2 earnings season.

The S&P 500 rose 0.7% to 7,493, extending gains after last week's holiday-shortened rally, as chip shares rebounded and investors prepared for the Federal Reserve's June meeting minutes.

"The market is entering earnings season with strong momentum from Q2, but the Fed minutes will set the tone for whether that can continue," said Chris Zaccarelli, chief investment officer at Northlight Asset Management.

The Dow Jones Industrial Average added about 80 points, while the Nasdaq Composite gained 1.4%. Technology shares led the advance, rising 1.95%, followed by industrials at 1.33% and materials at 0.71%. Real estate fell 1.16%, consumer defensive stocks slipped 1.04%, and healthcare dropped 0.72% as investors rotated out of defensive positions.

The Fed will release minutes from its June 28-29 meeting on Wednesday, with markets pricing in about a 30% chance of a rate hike at the July 28-29 meeting, according to CME Group's FedWatch tool. The second-quarter earnings season kicks off this week, with analysts expecting S&P 500 companies to report profit growth of about 10% from a year earlier.

Semiconductor Rebound Powers Broader Rally

The iShares Semiconductor ETF (SOXX) recovered after last week's nearly 6% decline, with Advanced Micro Devices jumping 7% and Intel gaining 5%. Nvidia and Broadcom also advanced as AI-bubble fears that weighed on the sector in recent weeks appeared to ease.

The rally followed a strong second quarter in which the S&P 500 surged 15%, its biggest quarterly gain since the 2020 post-pandemic rebound. The Russell 2000 rose 0.5% Monday, adding to a first-half gain of nearly 22% — its best such performance since 1991 — as the rally broadened beyond megacap technology names.

Breadth data showed 266 stocks hitting new highs versus 141 new lows on the New York Stock Exchange, though gains remained concentrated in large-cap technology. The Cboe Volatility Index held near 16, below its trailing one-year average, signaling complacency among options traders.

The 10-year Treasury yield was little changed at 4.49%, while the U.S. dollar index slipped 0.5% to 100.90. Gold futures rose 1.3% to $4,135 an ounce, and Brent crude oil held near $71.60 a barrel as a US-Iran ceasefire continued to steady energy markets.

This article is for informational purposes only and does not constitute investment advice.