Wall Street started the first full trading week of July on a positive note, helped by a strong rebound in chip stocks.
Investors returned after the long U.S. Independence Day weekend, while markets continued to build on last week’s gains. That shortened trading week also capped the best quarterly performance for stocks in six years.
Traders are now looking ahead to two key market drivers: the Federal Reserve’s latest meeting minutes and the start of earnings season.
Nasdaq Leads Major Indexes Higher
At 15:02 ET, the S&P 500 was up 0.9% at 7,547.72 points.
The tech-heavy Nasdaq Composite climbed 1.2% to 26,144.62 points, supported by strength in semiconductor stocks.
The Dow Jones Industrial Average added 0.2% to 52,997.13 points and was on track for a record close.
Semiconductor Stocks Bounce Back
Chip stocks rebounded after two weeks of losses.
With oil prices falling and diplomatic progress in the Middle East reducing geopolitical risk, investors shifted their focus back to the artificial intelligence trade.
Semiconductor stocks have been one of the biggest winners of the AI boom. However, they recently came under pressure as investors took profits and questioned whether valuations had risen too quickly.
AI Valuation Concerns Remain
The Philadelphia Semiconductor Index, a key measure of chip stock performance, had fallen around 12% during its two-week losing streak.
Investors have become more cautious about high valuations in AI-related stocks. They are also watching whether massive spending on AI infrastructure will eventually generate strong returns.
Despite those concerns, the index staged a recovery on Monday and was last up 2.7%.
Memory and Storage Stocks Join the Rally
Memory and storage stocks also moved higher after recent weakness.
Demand for more memory processing power has increased sharply as companies build AI systems. This has benefited firms such as Western Digital, SanDisk, Micron Technology, SK Hynix, and Samsung Electronics.
According to Michael O’Rourke, chief market strategist at Jones Trading, semiconductor, memory, and storage names led the market higher.
He noted that Goldman Sachs raised price targets on several companies. Reports from Asia also suggested that Samsung may raise DRAM prices by 20% this quarter.
O’Rourke said investors appeared to be rotating back into the AI trade after last week’s move into other sectors.
Trump Rings Opening Bell at Oval Office
Away from technology stocks, President Donald Trump joined representatives from the New York Stock Exchange and Nasdaq to ring the opening bell at the Oval Office.
The event marked the launch of Trump Accounts, a government initiative designed to create investment accounts for U.S. children.
Trump said the administration had deposited one-time seed contributions of $1,000 into the accounts of more than 500,000 American children.
He also pointed to Wall Street’s strong performance this year, including the S&P 500 moving above 7,000 points and the Dow surpassing 50,000 points.
Fed Policy Outlook Stays in Focus
Investors are also watching the Federal Reserve’s interest rate outlook closely.
Last week’s softer-than-expected June payrolls data reduced expectations for another near-term rate hike. Traders viewed the labor market as steady but not too strong, giving the Fed more room to keep rates unchanged.
Under new Fed Chair Kevin Warsh, the central bank has signaled that it will stop giving forward guidance and focus mainly on fighting inflation.
Warsh repeated that view during public comments in Portugal last week.
Markets will now study the Fed’s June meeting minutes on Wednesday for more details. Half of Fed officials had indicated that rate hikes may still be needed this year.
U.S. Services Data Shows Improvement
Monday’s economic data also showed that U.S. services activity improved in June.
S&P Global said its services PMI reached its highest level since the Middle East conflict began.
Meanwhile, the Institute for Supply Management said prices paid by services businesses fell to their lowest level since February.
Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, said steady services PMI reports support the view that the economy can keep adding jobs in the second half of the year.
He added that recent data may make the Fed less worried about the labor market, allowing policymakers to focus more on inflation.
Dell Gains After Trump Comment
Among individual movers, Dell Technologies rose nearly 4% after Trump encouraged Americans to “go out and buy a Dell computer” during the Oval Office event.
Elsewhere, Strategy traded slightly higher.
The major corporate Bitcoin holder reported an $8.32 billion digital asset loss for the three months ended June. It also sold Bitcoin to help fund preferred stock dividends.
Earnings Season Begins This Week
Investors are now preparing for the start of earnings season.
Companies including Levi Strauss, PepsiCo, and Delta Air Lines are among the first major names set to report later this week.
Their results could help shape market sentiment after Wall Street’s strong start to July.
