S&P 500, Nasdaq cling to recent gains as Apple hits record high

  • Palo Alto gains on S&P 500 index inclusion
  • Apple climbs ahead of developer conference
  • Indexes: Dow down 0.27%, S&P off 0.01%, Nasdaq up 0.07%

June 5 (Reuters) – The S&P 500 and Nasdaq on Monday hovered near highs hit in the previous session as Apple scaled an all-time peak, while investors assessed odds of the Federal Reserve pausing interest rate hikes at its upcoming policy meeting.

Apple Inc (AAPL.O) shares rose 1.5% to touch an all-time high ahead of its annual software developer conference later in the day, where the iPhone maker is widely expected to announce a new mixed-reality headset.

Other growth stocks also rose, with Alphabet Inc (GOOGL.O) gaining 1.5% and Amazon.com Inc (AMZN.O) adding 0.4%.

U.S. stocks rallied on Friday after a report showed that wage growth moderated in May, raising hopes that the U.S. central bank could skip a rate hike next week, while investors welcomed a Washington deal that avoided a catastrophic debt default.

Ahead of key inflation data next week, traders are pricing in a 76% chance that the Fed will choose to hold interest rates in its June 13-14 policy meeting, according to CME Group’s Fedwatch tool, though they expect another hike in July.

“We are now waiting for that next major data point and to determine whether the Fed is going to be skipping or pausing or hiking,” said Thomas Hayes, chairman at Great Hill Capital LLC.

“We are in the skip camp for now. We could see headline inflation with a ‘3’ handle, which is going to be very good for the Fed to give them cover to skip this month. Hopefully those trends continue, and we can be on a pause until the end of the year.”

The benchmark S&P 500 (.SPX) closed at a fresh nine-month high on Friday and the tech-heavy Nasdaq (.IXIC) scaled a new one-year peak, underpinned by the jobs reports and gains in megacap companies that have outperformed the broader market this year.

A survey from the Institute for Supply Management showed U.S. services sector barely grew in May as new orders slowed, pushing a measure of prices paid by businesses for inputs to a three-year low, which could aid the Fed’s fight against inflation.

At 10:15 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 90.45 points, or 0.27%, at 33,672.31, the S&P 500 (.SPX) was down 0.44 points, or 0.01%, at 4,281.93, and the Nasdaq Composite (.IXIC) was up 9.44 points, or 0.07%, at 13,250.21.

Palo Alto Networks Inc (PANW.O) climbed 3.4% as the cybersecurity firm looks set to replace Dish Network (DISH.O) in the S&P 500 index. Dish shares fell 1.8%.

Big U.S. banks slipped after the Wall Street Journal reported that U.S. regulators were preparing to tighten rules for large banks, which could include raising their capital requirements by 20% on average. Bank of America Corp (BAC.N) was down 1.1%, while Citigroup Inc (C.N) slipped 0.9%.

Declining issues outnumbered advancers by a 1.96-to-1 ratio on the NYSE and by a 1.63-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and one new low, while the Nasdaq recorded 48 new highs and 21 new lows.

Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru
Editing by Vinay Dwivedi

Our Standards: The Thomson Reuters Trust Principles.

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Shristi is a correspondent, part of the markets team reporting on the stock markets across U.S., UK, Canada, Europe and Emerging markets.