S&P 500 soars to record high amid mega-cap tech earnings and Fed decision

The S&P 500 rose Monday and headed for a fresh record high as Wall Street looked toward several mega-cap tech earnings reports and the Federal Reserve’s rate policy decision.

This week marks the busiest slate of the earnings season, with 19 per cent of the S&P 500 reporting earnings. Mega-cap tech names Microsoft, Apple, Meta, Amazon and Alphabet — part of the core group of big tech companies that have led this year’s rally — will be posting their results.

Investors will also keep an eye on several Dow components reporting their quarterly earnings, including Boeing and Merck.

Meanwhile, the Federal Open Market Committee will begin its two-day policy meeting on Tuesday. Investors are nearly certain the central bank will keep rates steady. Traders in the fed funds futures market assigned an almost 97 per cent probability the Fed will not cut rates at the upcoming meeting, according to the CME Group.

Overall, the benchmark climbed 0.7 per cent, rising above its highest ever close of 4,894.16 reached Jan. 25. The Dow Jones Industrial Average added 203 points, or 0.5 per cent, while the Nasdaq Composite gained 1 per cent.

Shares of iRobot plummeted more than 9 per cent following news that Amazon would no longer pursue a deal to acquire the company.

In commodity-related news, Brent and US oil futures dipped in anticipation of US action following an attack on an American base in Jordan by Iran proxy fighters. US Defense Secretary Lloyd Austin pledged to protect troops amid a series of attacks on US forces in the region. While West Texas Intermediate had a significant increase last week due to short covering, the lack of substantial long positions indicates scepticism regarding the recent rally, according to traders.

The liquidation of Evergrande, once China's largest property developer, also contributed to the fall in oil prices, as traders are fearing a reduction in oil demand this year.

Turning to US sectors, all closed higher overnight except for Energy. Consumer Discretionary was the best performer.

Shifting to the Australian resources landscape, Australia's resource minister, Madeleine King, is seeking investments from South Korea and Japan to develop minerals critical to green energy transition. She also stated that Australia has the potential to become a long-term reliable supplier to Japan for critical minerals and rare earths. Note that the push for investment comes amid a global downturn in prices for electric vehicle battery materials including lithium and nickel.

Futures

The SPI futures are pointing to a 0.5 per cent rise.

Currency

One Australian dollar at 8.30am was buying 66.09 US cents.

Commodities

Gold has gained 0.68 per cent. Silver has gained 1.94 per cent. Copper has gained 0.86 per cent. Oil has fallen 1.26 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE lost 0.03 per cent, Frankfurt fell 0.12 per cent, and Paris closed 0.09 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei gained 0.77 per cent, Hong Kong’s Hang Seng gained 0.78 per cent and China’s Shanghai Composite closed 0.92 per cent lower.

Yesterday, the Australian share market closed 0.31 per cent higher at 7,578.45.

Ex-dividends

Djerriwarrh Investments (ASX:DJW) is paying 7.25 cents fully franked.
Diverger (ASX:DVR) is paying 2 cents fully franked.
Gryphon Capital Income Trust (ASX:GCI) is paying 1.5 cents unfranked.
KKR Credit Income Fund (ASX:KKC) is paying 1.67 cents unfranked.
Perpetual Credit Income Trust (ASX:PCI) is paying 0.6824 cents unfranked.
360 Capital Mortgage REIT is paying 3.5 cents unfranked.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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