S&P 500 up, Nasdaq at record high as megacap tech stocks rise

The benchmark S&P 500 rose and the Nasdaq reached all-time highs on Monday as most megacap and growth stocks advanced, though risk sentiment remained in check as Treasury yields held near multi-year highs.

Heavyweight tech stocks took the lead in early trading, with Nvidia rising 1.1%, hovering close to its record high hit in the previous session. Meta Platforms, Microsoft and Tesla all added more than 1%.

Seven of the 11 S&P 500 sectors were trading higher, with communication services and utilities leading gains.

Chip stocks were weak early on with the Philadelphia chips index down 0.3%, while software-related companies were among the top gainers. The S&P 500 software & services index rose 1.4%.

PTC was the top gainer on the S&P 500, rising 34.6% after France’s Schneider Electric agreed to acquire the software firm in a $22.6 billion all-cash deal.

At 10:19 a.m. ET, the Dow Jones Industrial Average fell 66.35 points, or 0.13%, to 51,110.61, the S&P 500 gained 30.33 points, or 0.39%, to 7,753.05 and the Nasdaq Composite gained 167.85 points, or 0.62%, to 27,360.28.

Optimism about robust corporate earnings has helped US stocks outperform global rivals in the last six months, despite the shaky geopolitical landscape and inflation worries.

Goldman Sachs analysts expect most companies will “once again surpass consensus earnings estimates this quarter,” noting 9% year-on-year earnings growth for the median S&P 500 stock.

“Many investors expect higher yields to derail the equity rally, but I think the market still has enough momentum to push through further increases in interest rates,” said Peter Andersen, founder of Andersen Capital Management.

However, risk sentiment remained subdued as government bond yields held near their highs. The benchmark 10-year U.S. Treasury yields were last at 5.296% amid concerns over deteriorating government finances, heavy debt issuance and elevated energy costs.

Global bond markets were in focus on worries over France’s debt burden and political uncertainty ahead of next year’s presidential election.

Meanwhile, the Nasdaq hit another record high after last week’s jump on softer-than-expected jobs data that doused chances of an October interest rate hike. Fresh data on Monday showed US services sector activity slowed in September.

Traders now see an 80% chance of the Federal Reserve holding interest rates steady this month, though a December rate hike remains largely priced in, according to the CME FedWatch tool.

Brent crude futures hovered near the psychologically important $100-a-barrel level as concerns over Gulf oil infrastructure disruptions amid the ongoing US-Israel war persisted.

Among other movers, RXO advanced 22.5% after freight forwarding firm C.H. Robinson Worldwide agreed to buy the transportation broker in a stock-and-cash transaction for $5.8 billion. C.H. Robinson fell 11.8%.

Cerebras Systems rose 9.5% after OpenAI CEO Sam Altman said the chip designer is a “close partner” and that the companies have “deep engagement pushing on the frontiers of speed.”

Advancing issues outnumbered decliners by a 1.04-to-1 ratio on the NYSE and by a 1.09-to-1 ratio on the Nasdaq.

The S&P 500 posted 3 new 52-week highs and 18 new lows while the Nasdaq Composite recorded 23 new highs and 157 new lows.