By Ragini Mathur and Avinash P
July 6 (Reuters) – The S&P 500 and the Nasdaq were on track to open higher on Monday, extending last week’s rally as chip stocks rebounded, while investors looked ahead to central bank minutes and the start of second-quarter earnings season later in the week.
Broadcom rose 4.2% in premarket trading after the chipmaker and Apple agreed to expand their partnership through 2031 to develop and supply a range of custom chips.
Memory-chipmakers Western Digital, Seagate and Micron Technology gained 5.4%, 4.4% and 3.4%, respectively.
The Dow closed at a record high on Thursday during a holiday-shortened week, putting it within reach of 53,000, a level it has never touched, with the main indexes gaining about 2% each.
The three indexes gained even as semiconductor stocks, among the market’s biggest drivers this year, lost momentum. Investors have taken comfort from the recent strength in healthcare, industrials and financials, taking it as a sign that the rally may be broadening beyond the chip and AI trade.
At 08:36 a.m. ET, Dow E-minis fell 49 points, or 0.09%, S&P 500 E-minis rose 30.5 points, or 0.41%, and Nasdaq 100 E-minis added 353.5 points, or 1.2%.
South Korean chipmaker SK Hynix is set to launch a U.S. listing on Monday to raise about $28 billion, according to regulatory filings, in another test of investor appetite for AI-linked companies.
SpaceX added 0.8%. Elon Musk’s rocket and AI giant is set to join the tech-heavy Nasdaq 100 on Tuesday.
The second-quarter earnings season gathers pace later this month and will be another key test for markets. Delta Air Lines and PepsiCo are expected to report results later in the week.
“This earnings season is important, given the fact that (the) “Magnificent 7″ have had a pretty tough time with things of late. And there’s a feeling out there that just a little bit of good news could see them resume their rally,” said David Morrison, senior market analyst at Trade Nation.
S&P 500 companies are expected to see their earnings grow 24.4% in the second quarter year-over-year, according to data compiled by LSEG.
U.S. Federal Reserve policy stays in focus, with investors reassessing the interest-rate path. Rate-hike bets eased slightly on Thursday after a cooler-than-expected jobs report.
Traders now see a 24% chance of a 25-basis-point rate hike at the central bank’s July 29 meeting, down from about 30% a week earlier, according to CME’s FedWatch tool. For September, markets are pricing in about a 44% chance of one quarter-point hike, compared with 48.3% a week ago.
Hawkish bets had risen after last month’s Federal Reserve meeting, the first under new Chair Kevin Warsh. Minutes from the meeting are due on Wednesday.
“Warsh wants the Fed to concentrate on the data and stick to that and not give any projections. So it could be that the minutes don’t really give very much away,” Morrison said.
Fed Governor Christopher Waller is scheduled to speak in Rome later in the session.
The ISM services survey later on Monday is expected to show only a slight easing to a still healthy 54.0.
Cloud security firm Datadog fell 4.7% after Bernstein downgraded the stock to “market perform” from “outperform.”
(Reporting by Ragini Mathur and Avinash P in Bengaluru; Editing by Pooja Desai)
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