Dow closes at a one-month high as investors broaden portfolios
Fed's preferred inflation PCE data due on Friday
Nvidia on track for third straight declining session
Oil companies advance on expectations of higher demand
Updates to 4:00pm ET
By Ankika Biswas, Lisa Pauline Mattackal and Carolina Mandl
June 24 (Reuters) - Stocks in a variety of sectors rallied on Monday and the blue-chip Dow Jones Industrial Average ended at a one-month high as investors rotated out of AI-linked stocks and added some laggards to their portfolios, betting on Federal Reserve interest rate cuts this year.
The S&P 500 and Nasdaq ended lower on the rotation out of technology stocks whose outsized gains have led this year's rally. Nvidia NVDA.O slid for a third session, as market watchers cited profit taking in the semiconductor bellwether after last week's meteoric rise made it theworld's most valuable company.
Other chip stocks including U.S. shares of Taiwan Semiconductor Manufacturing TSM.N, Broadcom AVGO.O, Marvell Technology MRVL.O and Qualcomm QCOM.O dropped, dragging the chip stocks index .SOX down.
"The market's selling some of the winners and buying some of the laggards here," said Jack Janasiewicz, lead strategist at Natixis Investment Managers. "It's a little bit of a nod to looking out over the inflation data that is coming out on Friday, as expectations are for a pretty soft print."
Technology .SPLRCT and the consumer discretionary were the only two decliners among the 11 S&P 500 sector indexes, while the energy sector was the top outperformer.
"There's been a rotation into some of the value areas of the market like financials, energy, and utilities. Energy has the additional benefit of a little bit of a jump in oil prices," said Ed Clissold, chief U.S. strategist at Ned Davis Research. Oil prices rose on Monday spurred by stronger fuel demand expectations, shares of energy and oil field services companies rose.
The Dow Jones Industrial Average .DJI jumped and registered a five-day winning streak. The small-caps index Russell 2000 .RUT also hit its highest in over a week, signaling broader market gains.
Except for Nvidia and other chip stocks, "the rest of the market is behaving positively on the expectation that we're still on course for a soft landing base case," said Carl Ludwigson ,managing director at Bel Air Investment Advisors.
The biggest event on investors' radar for the week is Friday's personal consumption expenditures (PCE) price index report, the Fed's preferred measure of inflation, expected to show a moderation in price pressures.
Investorsstill expect about two rate cuts this year, pricing in a 61% chance of a 25-basis-point cutin September, asper LSEG's FedWatch. The Fed's ownlatest projection is forone rate cut likely in December.
San Francisco Fed President Mary Daly said she does not believe the U.S. central bank should cut rates before policymakers areconfident inflation is headed toward 2%.
According to preliminary data, the S&P 500 .SPX lost 15.73 points, or 0.29%, to end at 5,448.89 points, while the Nasdaq Composite .IXIC lost 190.19 points, or 1.09%, to 17,499.17. The Dow Jones Industrial Average .DJI rose 257.99 points, or 0.66%, to 39,408.32.
Other data this weekinclude durable goods, weekly jobless claims and final first-quarter GDP figures, the annual Russell index reconstitution. Some quarterlyearnings reports also are due.
On Thursday, PresidentJoe Biden will debate Republican rivalDonald Trump in Atlanta, which could influence the outcome of a race for the November election that opinion polls show as neck-and-neck.
Meta Platforms META.O rose aftera report the Facebook parent has discussed integrating its generative AI model into Apple's AAPL.O recently announced AI system for iPhones. Apple's shares also climbed.
RXO RXO.N leapt on plans to buy United Parcel Service's UPS.N Coyote Logistics business unit for $1.025 billion.
Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru, and Carolina Mandl in New York; Editing by Maju Samuel and David Gregorio
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