U.S. stocks advanced to their highest level in more than a year on Monday as investors added to a rally driven by shares of major technology companies.
The blue-chip S&P 500 rose 0.9% to 4,338.93, surpassing a peak reached last August to mark its highest point since April 2022. The Nasdaq Composite gained 1.5% to a level that was also the highest in nearly 14 months.
The stock remains well below the all-time highs reached at the start of 2022, but it has started the year strong. Last week, the S&P rallied 20% from its October lows, meeting the general definition of a bull market.
Gains were driven by the semiconductor and software industries, which advanced 33% and 19% respectively over the past 12 months, with recent enthusiasm for artificial intelligence boosting their performance.
“Very few stocks have driven the S&P,” said Lou Bryan, market strategist at DRW Trading. “It’s an unusual circumstance that brings us here.”
Investors this week are bracing for US inflation data and key central bank policy meetings.
Monday’s rally in stocks ignored oil stocks as the S&P 500 energy sector fell 1%, making it the biggest decliner in the index. Oil prices fell despite a recent production cut announced by Saudi Arabia, with traders focusing on strong supplies elsewhere and rising demand in China. Brent crude was down 3.9% at $71.84 a barrel.
Stocks were buoyed by bets that the Federal Reserve will resist raising interest rates when it meets on Tuesday and Wednesday, marking the first pause in the central bank’s 14-month campaign to tame inflation.
“With signs that the economy is moving towards a potential recession, the expectation is that (Fed policymakers) are likely to keep rates on hold,” said Suzanne Streeter, head of money and markets at Hargreaves Lansdown.
The latest US consumer price index report will be released on Tuesday. It is expected to show that headline inflation slowed to 4.1 percent year-on-year in May, according to economists polled by Reuters.
The reading would mark a significant improvement from the 4.9 percent interest rate in April, following a 5 percent figure in March, and give the Fed more room to pause.
“Any deviation from the forecast path is likely to cause sharp volatility in the markets,” Streeter said.