Wall St closes higher as investors return to megacap stocks
Nvidia jumps on report of new AI chip for China market
Mattel soars after Reuters reports buyer interest
CrowdStrike slips after Friday's global cyber outage
Verizon falls on Q2 revenue miss
Indexes rise: Dow 0.32%, S&P 1.08%, Nasdaq 1.58%
Updates with closing prices
By David French
July 22 (Reuters) -Wall Street's three benchmarks endedhigher on Monday as investors returned to megacap growth stocks, helping both the S&P 500 .SPX and Nasdaq Composite .IXIC recover from their worst weekly performance since April.
The Dow Jones Industrial Average .DJI was also back in positive territory, breaking a two-session skid since hitting an all-time closing high last Wednesday.
Megacaps Alphabet GOOGL.O, Meta Platforms META.O and Tesla TSLA.O all advanced between 2.2% and 5.1% afterbeing major drags on the market last week.
Nvidia NVDA.O also rose 4.8% after Reuters reported the artificial intelligence chip leader was working on a version of its new flagship AI chips for the China market that would be compliant with current U.S. export controls.
The Information Technology index .SPLRCT climbed 2%, toppingsectoral gainers and snapping a four-day losing streak.
"We think this move today probably has more to do with a rebound from the selling that occurred last week than anything else," said Jason Pride, chief of investment strategy & research at Glenmede.
Chief among the other factors on traders' minds was a reexamination of the state of the presidential race after U.S. President Joe Biden announced his withdrawal and endorsed Vice President Kamala Harris' candidacy for the November election on Sunday.
Biden's exit could prompt investors to unwind trades on bets that a victory for Republican Trump would increase U.S. fiscal and inflationary pressures. But some analysts said markets could benefit from an increased chance of a divided government under the next administration.
Online betting site PredictIt showed pricing for a Donald Trump victory slipped 4 cents to 60 cents, while climbing 12 cents for a Harris win to 39 cents.
Trump-linked stocks were mixed on Monday, with Trump Media & Technology Group DJT.O dropping 0.8%, while software firm Phunware PHUN.O gained 4%.
Having digested the news of Biden's withdrawal, investors will now be looking for answers to key questions including who will join Harris on theDemocratic presidential ticket and to what degree, if any, the vice president will deviate from the platform which Biden was headlining.
This element of uncertainty is present alongside traders' angst over quarterly earnings, including from two of the so-called Magnificent Seven companies - Alphabet and Tesla - on deck this week.
The results will test whether the recent rally in top-tier high-momentum stocks is tenable and if a move to underperforming sectors will continue.
"We're seeing the market begin to price in a little bit a faster set of rate cuts, and that is leading to a bit of a shift in leadership to favor smaller-cap stocks and to deviate from the focus on the largest tech companies," said Glenmede's Pride.
"Obviously today looks a little bit different to that, but it's still a trend in the background."
The S&P 500 .SPX gained 59.41 points, or 1.08%, at 5,564.41 points, while the Nasdaq Composite .IXIC climbed 280.63 points, or 1.58%, to 18,007.57. The Dow Jones Industrial Average .DJI rose 127.91 points, or 0.32%, to 40,415.44.
Cybersecurity firm CrowdStrike CRWD.O slumped 13.5%, extending losses after a software update from the company sparked Friday's global tech outage.
Delta Air Lines DAL.N dropped 3.5% after canceling over 600 flights as it struggled to restore operations after the outage.
Verizon Communications VZ.N fell 6.1% after a second-quarter revenue miss.
Mattel Inc MAT.O jumped 15.1% after Reuters reported the toy maker had been approached by buyout firm L Catterton with an acquisition offer.
Volume on U.S. exchanges was 10.95 billion shares, compared with the 11.37 billion average for the full session over the last 20 trading days.
The Trump Trade https://tmsnrt.rs/3YeC3tB
Reporting by Shubham Batra, Ankika Biswas and Lisa Mattackal in Bengaluru, and David French in New York; Editing by Sherry Jacob-Phillips, Pooja Desai and Richard Chang
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