Nasdaq rallies on tech strength; Dow pulls back

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 24, 2024. REUTERS/Brendan McDermid

By Sinéad Carew and Ankika Biswas

(Reuters) -The Nasdaq climbed 1% on Tuesday, buoyed by strength in Nvidia and other tech megacaps, while the Dow slipped as retailers weighed and investors awaited a crucial inflation print this week for further cues on the path of U.S. monetary policy.

AI chip firm Nvidia soared more than 5% after a three-session sell-off and the broader chip sector outperformed with the Philadelphia Semiconductor index adding 1.6%.

Technology led sector gains, up 1.6%, recovering from a three-day slide while megacaps including Alphabet and Meta Platforms boosted the S&P 500 communication services index, which was up 1.4%.

The recent pullback in tech and tech-adjacent stocks had prompted investors to lap up lagging sectors, with utilities and energy enjoying strong gains on Monday.

But investors were going in the opposite direction on Tuesday and repositioning themselves back into popular technology stocks after the short break, David Lefkowitz, head of U.S. equities at UBS Global Wealth Management.

"What we'd been seeing over the past few weeks is the AI levered companies sucking all the oxygen away from other parts of the market. We saw that reverse for a few days and we're now seeing that dynamic reassert itself," he said.

"We don't have a lot of data to sink our teeth into today. Given that, most of the moves are more positioning."

At 2:14 p.m. EDT the Dow Jones Industrial Average fell 297.08 points, or 0.75%, to 39,114.13, the S&P 500 gained 15.10 points, or 0.28%, to 5,462.97 and the Nasdaq Composite gained 195.09 points, or 1.11%, to 17,691.90.

Among the S&P 500's 11 major industry sectors only two were gaining ground, with real estate leading declines, down 1.3%, followed by materials, down 1.2%.

The Dow pulled back from a one-month high hit on Monday. Home improvement retailer Home Depot was the Dow's biggest percentage decliner, falling 3.8%.

Retail giant Walmart caused some jitters with a 2.8% drop after its CFO flagged the second quarter as the "most challenging quarter" at the NYSE 2024 European Investor Conference in London.

The Dow Jones Transport Average dropped 1.3% after recent gains with freight rail company Norfolk Southern leading declines after a dimmer analyst view and a National Transportation Safety Board review of a derailment last year. Index heavyweight FedEx was down about 1% ahead of its quarterly update due after the close.

The most anticipated economic data due this week is the personal consumption expenditures (PCE) price index - the Fed's preferred inflation gauge - on Friday.

Spirit AeroSystems slumped 4.3%. A media report on Monday said Boeing offered to acquire the airplane fuselage maker in a deal funded mostly by stock that values its key supplier at about $35 per share. Boeing shares were down 2.3% on Tuesday.

Cruise operator Carnival Corp gained 8.4% after raising its annual profit forecast for the second time this year.

Declining issues outnumbered advancers by a 2-to-1 ratio on the NYSE where there were 95 new highs and 79 new lows.

On the Nasdaq, 1,696 stocks rose and 2,453 fell as declining issues outnumbered advancers by a 1.45-to-1 ratio. The Nasdaq Composite recorded 39 new highs and 146 new lows.

The S&P 500 posted 19 new 52-week highs and 3 new lows.

(Reporting by Sinéad Carew in New York, Ankika Biswas and Lisa Mattackal in BengaluruEditing by Shounak Dasgupta, Maju Samuel and Matthew Lewis)