(Bloomberg) — A rise in shares of semiconductor makers helped lift stocks toward new record highs, as traders bet a potential Federal Reserve interest-rate cut will continue to fuel the semiconductor industry, which has driven the market rally this year.
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The S&P 500 approached the historic 5,500 level. Nvidia Inc. overtook Microsoft Corp. as the world’s most valuable company after one bullish analyst predicted the chipmaker’s valuation could reach nearly $5 trillion over the next 12 months, up from about $3.3 trillion. Bonds also rose, with traders rushing to sell $13 billion in 20-year Treasury notes.
Wall Street sifted through mixed economic data that showed U.S. industrial production rose in May, helped by a broad-based recovery in factory production, while retail sales barely rose and were revised down from the previous month, suggesting growing financial strain on consumers.
“So far, the economy is potentially capable of achieving a soft landing, especially if the Fed adjusts policy quickly as conditions change,” said Jeffrey Roach of LPL Financial.
The S&P 500 was trading at around 5,480. Nvidia rose more than 3.5% after Rosenblatt Securities analyst Hans Mosesmann raised his price target on the chipmaker to $200, a Wall Street high, from $140. The yield on the 10-year Treasury note fell 6 basis points to 4.22%.
Bank of America’s institutional investors piled into U.S. stocks for the second straight week, with a focus on technology and social media stocks, strategists including Jill Carey Hall wrote in a client note on Tuesday.
Investors around the world are likely to continue pouring money into record-high stock markets, according to a Bank of America survey.
When asked which asset classes would benefit most from a reallocation of money market funds, 32% of respondents chose U.S. stocks. Another 19% said they would move their money into global stocks, and a quarter of respondents said they would buy government bonds.
For now, there’s no big question in the market about tempering enthusiasm over a rally in U.S. stocks that’s been driven by a handful of tech stocks. But some investors are increasingly looking for ways to hedge concentration risk. The “Magnificent Seven” megacaps have contributed more than 60% of the S&P 500’s return this year.
While the benchmark has reached overbought territory, stock market breadth remains very narrow, with only 46% of stocks trading above their 50-day moving averages. The spread between market cap and the Relative Strength Index (RSI) for the equally-weighted S&P 500 is at its widest since at least 1990.
Company Highlights:
US regulators say Dollar Tree continued to sell children’s applesauce that contained “extremely high” levels of lead after the company recalled the products over contamination concerns.
Electric-vehicle startup Fisker filed for bankruptcy on Monday, months after ceasing production of its only vehicle, the fault-prone Ocean SUV.
Boeing quality inspectors have alleged that the company mishandled and lost hundreds of defective parts, some of which may have been in new 737 MAX planes, the latest whistleblower revelation pointing to possible wrongdoing at the company.
Homebuilder Lennar Corp. reported better-than-expected orders but its trading outlook for the current quarter fell short of analysts’ expectations.
Philip Morris International has halted online sales of Zyn, a popular U.S. nicotine pouch brand, after receiving a subpoena over flavored products banned in the District of Columbia.
Major events this week:
UK Consumer Price Index, Wednesday
June 19th US National Holiday, Wednesday
China loan prime rate Thursday
Eurozone consumer confidence on Thursday
Bank of England interest rate decision on Thursday
U.S. housing starts, initial jobless claims Thursday
Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday
U.S. Existing Home Sales, Conference Board Leading Index, Friday
Fed President Thomas Barkin to speak on Friday
Some of the key market developments:
stock
The S&P 500 was up 0.2% as of 2:37 p.m. New York time.
The Nasdaq 100 index was little changed
The Dow Jones Industrial Average was little changed
The MSCI World Index rose 0.4%.
currency
The Bloomberg Dollar Spot Index fell 0.1%.
The euro was unchanged at $1.0734.
The British pound was little changed at 1.2703 dollars
The Japanese yen was almost unchanged at 157.89 yen to the dollar.
Cryptocurrency
Bitcoin fell 2.4% to $64,760.7.
Ether fell 2.9% to $3,412.45.
Bonds
The yield on the 10-year Treasury note fell 6 basis points to 4.22%.
German 10-year bund yields fell 2 basis points to 2.40%.
UK 10-year government bond yields fell 7 basis points to 4.05%.
merchandise
West Texas Intermediate crude rose 1.4% to $81.47 a barrel.
Spot gold rose 0.5% to $2,330.21 an ounce.
This story was produced with assistance from Bloomberg Automation.
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