U.S. Stock Market Hits Record High as Tech Stocks Surge 4%

On Monday, the U.S. stock market closed at a record high, driven by a surge in technology stocks. This marked the 28th time the S&P 500 index has reached a new high this year. The rally was fueled by NVIDIA's announcement of a potential $100 billion investment in OpenAI, which boosted investor optimism in the artificial intelligence sector.

NVIDIA, the world's largest chip manufacturer, saw its stock rise by approximately 4%. The investment aims to help OpenAI build data centers equipped with NVIDIA's advanced AI chips to train and deploy OpenAI's models. Apple's stock also surged by 4.3%, reaching its highest level since December and turning its year-to-date performance positive. Pfizer's stock saw a slight increase as the company agreed to acquire Mersera, aiming to catch up with competitors in the weight loss drug market.

Consumer healthcare company Johnson & Johnson closed at a record low, following reports that officials from the Trump administration plan to link the active ingredient in Tylenol with autism. Despite the mixed performance of individual stocks, the overall market sentiment remained bullish, with large technology companies driving the market to new heights.

Tony Pasquariello, the head of the hedge fund business at a prominent investment bank, advised investors to maintain a rational bullish stance. He noted that while the current positioning and tactical risk/reward structure are not ideal, investors should avoid getting in the way of the momentum in large-cap U.S. technology stocks. The Federal Reserve's recent policy statements have also influenced market sentiment, with officials expressing differing views on the necessity and feasibility of significant rate cuts in the coming months.

Stephen Miller, a newly appointed Federal Reserve governor, emphasized the importance of substantial rate cuts to protect the labor market in the near future. In contrast, Alberto Musalem, president of the Federal Reserve Bank of St. Louis, cautioned that the limited room for rate cuts due to high inflation. Beth Hammack, president of the Federal Reserve Bank of Cleveland, advised officials to proceed with caution to avoid overheating the economy.

David Kostin, the chief U.S. equity strategist at a leading investment bank, raised the target price for the S&P 500 index to 6,800 points for the next three months, 7,000 points for the next six months, and 7,200 points for the next 12 months. He noted that historically, when the Federal Reserve resumes rate cuts during periods of economic growth, the S&P 500 index has delivered a median 12-month return of 15% over the past 40 years.