NEW YORK – Wall Street’s main indexes closed higher on July 21, with the Nasdaq leading gains as a steep rally in semiconductor shares helped shift the focus away from the latest Middle East hostilities and tariff battles, while investors looked ahead to major technology earnings reports.
A rebound in recently battered semiconductor stocks provided huge support for the main US stock indexes and the Philadelphia SE Semiconductor Index finished with a 5.2 per cent rally in its second consecutive advance after ending July 17 more than 20 per cent below its late-June record high.
“Investors are really buying back in to the semis ahead of earnings because they have fear of missing out (FOMO), that these companies could report outsized earnings beats and increase their outlooks and they don’t own as much as they did before the most recent pullback,” said Lindsey Bell, chief investment strategist at 248 Ventures in Charlotte, North Carolina.
But Bell cautioned that when stocks rally sharply ahead of earnings, “it makes it more difficult for them to run in response to earnings.”
“The numbers are going to be really good, but the stocks are also priced for perfection,” she said.
The chip index dipped last week as investors grew concerned about high valuations and hefty investments on artificial intelligence. But even after that drop, it is still up nearly 75 per cent year-to-date.
The Dow Jones Industrial Average rose 385.38 points, or 0.74 per cent, to 52,224.64, the S&P 500 gained 65.92 points, or 0.89 per cent, to 7,509.20 and the Nasdaq Composite gained 329.13 points, or 1.29 per cent, to 25,837.21.
Among the benchmark’s 11 major industry sectors, nine advanced, with a 2.35 per cent rally in information technology leading the pack. The consumer staples index was the biggest loser, finishing down 1 per cent, followed by communications services, which lost 0.85 per cent.
Leading the S&P 500 were Sandisk, up 14.3 per cent, Western Digital, which rose 12.5 per cent, and Micron Technology, with a 12.2 per cent advance.
Equity investors appeared to shrug off President Donald Trump’s unveiling of 50 per cent tariffs on a wide range of imports from Canada on July 20.
They also looked past geopolitics even as oil prices settled up 2 per cent after hitting five-week highs. This was after two oil tankers carrying Saudi crude to Asia reversed course in the Red Sea after Yemen’s Iran-aligned Houthis threatened to impose a blockade on commercial shipping there.
Trump said the United States would respond if the Houthis followed through.
“Investors see (the war) as transitory because we know two things – that US$100 oil is a pressure point for Trump, and we also know that midterm elections are coming up,” Bell said.
Meanwhile, their focus this week will turn to results from Alphabet and chipmakers Intel and Texas Instruments.
Among individual stocks, 3M shares rallied 7.3 per cent after the industrial giant lifted its full-year profit forecast.
Hasbro stock jumped 8.8 per cent after it raised annual revenue and profit forecasts, betting on demand for its digital gaming and Magic: The Gathering products.
Danaher shares sank 11 per cent and were the biggest loser in the S&P 500, after the life sciences firm trimmed its core revenue growth outlook and reported weaker-than-expected revenue in its biotechnology business.
Shares of MSCI, the benchmark’s second-biggest loser, tumbled 10 per cent after the index provider raised its full-year operating expense forecast despite better-than-expected quarterly revenue. And Genuine Parts shares dropped 2.7 per cent after the auto parts distributor lowered its full-year profit outlook.
Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the New York Stock Exchange, where there were 113 new highs and 116 new lows. On the Nasdaq, 2,995 stocks rose and 1,814 fell as advancing issues outnumbered decliners by a 1.65-to-1 ratio. The S&P 500 posted 10 new 52-week highs and 7 new lows.
On US exchanges, volume was light, with 16.14 billion shares changing hands compared with the 19.56 billion moving average for the last 20 sessions. REUTERS
