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Tech Stocks May Lead Initial Upward Move On Wall Street

iHub News
Latest News
July 10 2024 9:11AM

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to see initial strength after ending yesterday’s choppy trading session little changed.

Technology stocks may lead an early upward move after Taiwan Semiconductor (NYSE:TSM) reported its second quarter sales surged much more than expected.

Shares of Taiwan Semiconductor, which supplies chips for AI giants like Nvidia (NASDAQ:NVDA) and Apple (NASDAQ:AAPL), are jumping by 2.6 percent in pre-market trading.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the release of closely watched consumer price inflation data on Thursday.

Economists expect the annual rate of consumer price growth to slow to 3.1 percent in June from 3.3 percent in May, while the annual rate of core consumer price growth is expected to hold at 3.4 percent.

Stocks showed a lack of direction over the course of the trading session on Tuesday, with the major averages bouncing back and forth across the unchanged line before eventually ending the day narrowly mixed.

Despite the choppy trading, the Nasdaq and the S&P 500 once again reached new record closing highs. While the Dow edged down 52.82 points or 0.1 percent to 39,291.97, the Nasdaq inched up 25.55 points or 0.1 percent to 18,429.29 and the S&P 500 crept up 4.13 points or 0.1 percent to 5,576.98.

The lackluster performance on Wall Street came as traders digested Federal Reserve Chair Jerome Powell’s testimony before the Senate Banking Committee.

Powell told the committee more good data would strengthen the central bank’s confidence inflation is moving sustainably toward its 2 percent target and lead to a potential interest rate cut.

“The Committee has stated that we do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent,” Powell said in prepared remarks.

“Incoming data for the first quarter of this year did not support such greater confidence,” he continued. “The most recent inflation readings, however, have shown some modest further progress, and more good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”

Powell’s remarks come as a report released by the Commerce Department late last month showed the annual rate of growth by core consumer prices, which exclude food and energy prices, slowed to 2.6 percent in May from 2.8 percent in April.

The Fed Chair also warned of the risk that leaving interest rates at an elevated level for too long could jeopardize economic growth.

“In light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” Powell said. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Banking stocks showed a significant move to the upside, however, with the KBW Bank Index climbing by 1.5 percent.

Notable strength was also visible among brokerage stocks, as reflected by the 1.1 percent gain posted by the NYSE Arca Broker/Dealer Index.

On the other hand, software stocks saw considerable weakness on the day, dragging the Dow Jones U.S. Software Index down by 1.6 percent.

Energy stocks also moved to the downside, as the price of crude oil moved lower for the third consecutive session.