S&P 500, Nasdaq advance as investors await key economic data

NEW YORK: The S&P 500 and the Nasdaq gained after a shaky start on Monday, finding their footing following last week’s AI-sparked tech rout, while investors focused on key economic data that could shed light on the Federal Reserve’s interest-rate path.

Software companies clawed back losses after a bruising week in which fears that rapidly progressing AI could intensify competition and squeeze margins sent them tumbling. The S&P 500 Software Services index gained 2.4 percent on the day.

ServiceNow rose 2.1 percent, while Salesforce and CrowdStrike gained 1.6 percent each.

The Dow hit an intraday record high, after surpassing 50,000 points for the first time on Friday, supported by a rotation into other pockets of the market. The small-cap Russell 2000 index gained 0.8 percent

The Nasdaq was about 3.1 percent away from its peak in October end, while the S&P 500 was 0.5 percent shy of its all-time high in January.

But caution lingered as investors were still uneasy over Big Tech’s ambitious capital expenditure plans. Amazon, Alphabet, Meta and Microsoft together are poised to spend around USD650 billion in the race to dominate AI.

“It’s an eye-popping number, USD650 billion… and that’s not something that investors are used to,” said Anna Rathbun, founder and CEO of Grenadilla Advisory.

“There was already fatigue of being surprised on the upside for AI investment when we were coming into this year, so this is investors not being used to such a high ticket price for AI investment and also being wary where the return from these investments are going to come from.”

At 11:18 a.m. ET, the Dow Jones Industrial Average fell 24.30 points, or 0.05 percent, to 50,091.37. The S&P 500 gained 33.68 points, or 0.49 percent, to 6,965.98, while the Nasdaq Composite advanced 211.97 points, or 0.92 percent, to 23,243.19.

The S&P 500 technology index and the Philadelphia SE Semiconductor index were up around 1.5 percent each.