U.S. stock futures edged higher early Monday after the Independence Day holiday, with the S&P 500 and Nasdaq 100 continuing their strong performance from last week. Dow futures remained relatively unchanged, despite the Dow Jones Industrial Average nearing the 53,000 mark. The S&P 500 and Nasdaq Composite each recorded approximately a 2% gain last week, fueled by the tech and hardware sectors.
Optimism in the market is largely attributed to the artificial intelligence (AI) sector. JPMorgan increased its year-end S&P 500 target to 7,800, citing AI-driven growth. However, there are growing concerns among some financial professionals about the concentration of the market, with AI stocks now accounting for 41% of the S&P 500. This concentration draws comparisons to the tech bubble before the dot-com crash, leading to warnings of a potential market pullback.
Despite the overall positive sentiment, individual tech stocks saw varied performance. Micron Technology experienced a significant 19% drop. Semiconductor stocks collectively fell 3.2%, though traders rotated into Financials and Healthcare sectors. SK Hynix, a South Korean chipmaker, is listing $28 billion in American Depository Receipts on Nasdaq, aiming to capitalize on the booming AI chip demand, with its shares having soared 273% this year. The company plans to invest $64.38 billion in new chip plants.
Investors are closely monitoring upcoming economic data, including services data and the latest Federal Reserve meeting minutes. The CME FedWatch tool indicates a 78.1% probability that interest rates will remain steady in July. Q2 earnings season is set to begin next week, with major U.S. banks reporting from July 14. Geopolitical factors, such as stalled Iran Strait of Hormuz talks and OPEC+ output increases, also contributed to market uncertainty, with oil prices slipping after OPEC+ confirmed an additional 188,000 barrels per day supply boost.
