By Ragini Mathur and Avinash P
July 6 (Reuters) – S&P 500 and Nasdaq futures were up on Monday, building on last week’s rally as chip stocks stabilized after recent weakness and investors awaited minutes from the last Federal Reserve meeting and the start of second-quarter earnings later in the week.
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 indexes gained even as semiconductor stocks, among the market’s biggest drivers this year, lost momentum. Investors have taken comfort from recent strength in healthcare, industrials and financials, taking it as a sign that the rally may be broadening beyond the chip and AI trade.
“This week, investors will continue to question technology valuations: whether they have gone too far, whether they make sense, or whether this is another great bubble – like railways or dot-com – waiting to burst,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Chip stocks found their footing before the bell, with memory-chip makers Western Digital, Seagate and Micron Technology rising 3.2%, 2.2% and 2.3%, respectively.
At 07:24 a.m. ET, Dow E-minis fell 23 points, or 0.04%, S&P 500 E-minis rose 33.5 points, or 0.44%, and Nasdaq 100 E-minis gained 324.25 points, or 1.1%.
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 1.7% in premarket trading, with Elon Musk’s rocket and AI giant set to join the tech-heavy Nasdaq 100 index on Tuesday.
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.
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.
Fed Governor Christopher Waller speaks in Rome later in the session, while New York Fed President John Williams is expected to provide commentary on Thursday. The Fed chair is scheduled to testify before the House Financial Services Committee next week.
The ISM services survey later on Monday is expected to show only a slight easing to a still healthy 54.0.
(Reporting by Ragini Mathur and Avinash P in Bengaluru; Editing by Pooja Desai)
