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S&P 500 and Nasdaq hit record highs as Nvidia rallies

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By Noel Randewich and Ankika Biswas

(Reuters) -A rally in chip stocks lifted the Nasdaq and S&P 500 to record highs on Monday as investors awaited fresh inflation data, commentary from Federal Reserve Chair Jerome Powell and the start of quarterly earnings season.

Nvidia (NASDAQ:NVDA) jumped 2.5%, while Super Micro Computer (NASDAQ:SMCI), which makes AI-optimized servers using Nvidia’s chips, rallied almost 9%. Intel (NASDAQ:INTC) rallied almost 6%.

The Nasdaq climbed to a record high, and the S&P 500 rose modestly and also reached a record high.

Traders will scrutinize consumer price data due on Thursday and producer price data expected on Friday to gauge the Fed’s progress in fighting inflation.

Investors worry that waiting too long to cut interest rates could damage the labor market and push the economy into a recession. They will closely monitor Powell’s semiannual testimony before U.S. Senate and House committees on Tuesday and Wednesday.

“What investors want to hear is a dovish tone and an acknowledgement that the two-sided risks are more evenly balanced today, in particular, with respect to the labor market,” said Ross Mayfield, an investment strategy analyst at Baird.

Expectations for interest-rate cuts as early as September grew after Friday’s nonfarm payrolls report showed U.S. job growth slowed in June – the latest data to point to weakness in labor market conditions.

Traders now see a greater than 75% chance of a rate cut of at least 25 basis points by September, up from last week’s 60%, according to CME’s FedWatch.

Citigroup, JPMorgan Chase (NYSE:JPM) and Wells Fargo are slated to kick off Wall Street’s second-quarter earnings season on Friday. Citigroup shares gained 1.1%, while Wells Fargo lost 1.4%.

Analysts on average see S&P 500 companies increasing their aggregate earnings per share by 10.1% in the second quarter, up from an 8.2% increase in the first quarter, according to LSEG I/B/E/S.

The S&P 500 was last up 0.06% at 5,570.68 points.

The Nasdaq gained 0.20% to 18,389.54 points, while the Dow Jones Industrial Average was down 0.08% at 39,345.56 points.

Of the 11 S&P 500 sector indexes, six rose, led by information technology, up 0.59%, followed by a 0.23% gain in materials. Consumer services fell almost 1%, dragged down by a 1.8% dip in Meta Platforms (NASDAQ:META).

Paramount Global fell more than 3% after it agreed on Sunday to merge with Skydance Media, scripting a new chapter for one of Hollywood’s oldest studios.

Planemaker Boeing (NYSE:BA) gained 0.3% after agreeing to plead guilty to a criminal fraud conspiracy charge and pay a fine of $243.6 million to resolve a U.S. Justice Department investigation into two fatal 737 MAX crashes.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.3-to-one ratio.

The S&P 500 posted 20 new highs and 7 new lows; the Nasdaq recorded 69 new highs and 90 new lows.

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