By Lisa Pauline Mattackal and Ankika Biswas
(Reuters) – Wall Street looked set to open higher on Wednesday as strength in shares of its biggest companies fuels a record rally, with Federal Reserve Chair Jerome Powell’s remarks and crucial inflation data expected to offer more direction this week.
AI-chip favorite Nvidia (NASDAQ:) jumped 2.1% in premarket trading after hitting a nearly three-week high in the previous session.
Tesla (NASDAQ:), too, gained 0.3% after HSBC hiked its price target on the EV maker’s stock, which clocked its longest winning streak of 10 sessions this year on Tuesday.
The rest of the so-called “Magnificent Seven” stocks, including Apple (NASDAQ:), Alphabet (NASDAQ:) and Microsoft (NASDAQ:), rose between 0.3% and 0.5%, as U.S. Treasury yields slipped.
A handful of large-cap stocks has been the main force behind Wall Street’s banner rally this year, raising questions about when other sections of the market could catch up and leading some market watchers to call for greater diversification.
Other chip stocks including Arm Holdings (NASDAQ:) and Micron Technology (NASDAQ:) gained over 1.1% each, with the U.S. listing of Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, climbing 2.5% after its second-quarter revenue handily beat estimates.
The benchmark closed at an all-time high for the fifth straight session on Tuesday, while the tech-heavy Nasdaq notched its sixth record closing high, after hopes for an interest-rate cut in September received a boost from Jerome Powell, who said the U.S. was “no longer an overheated economy”.
However, as expected, Powell refrained from committing to a timeline for cuts in his testimony to Congress. He is slated to appear before the House Financial Services Committee at 10 a.m. ET for further questioning from lawmakers.
“Powell came in a little bit more dovish than we expected… he’s purposely trying to signal to markets that if there is a good inflation print this week, that September is back on the table as a possibility for a rate cut,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Bets on a 25-basis-point rate cut by September ticked up to 74% on Wednesday, up from around 70% yesterday and 45% a month ago, according to CME’s FedWatch. Comments from Fed officials Austan Goolsbee, Michelle Bowman and Lisa Cook are also expected through the day.
Attention will now shift to U.S. inflation data this week, with the Consumer Price Index due on Thursday and the Producer Price Index report on Friday.
The second-quarter earnings season, which kicks off this week with major banks due to report on Friday, will be a key test for whether high-flying megacaps can justify expensive valuations and continue their strong runs.
At 8:40 a.m. ET, were up 20 points, or 0.05%, were up 14.25 points, or 0.25%, and were up 83 points, or 0.40%.
Goodyear Tire & Rubber Company gained 1.6% after a report that Japan’s Yokohama Rubber was in talks to buy its off-road tire business for at least $1 billion.
Gene-sequencing equipment maker Illumina (NASDAQ:) jumped 3.6% on plans to acquire privately held Fluent (NASDAQ:) BioSciences.