Nasdaq leads the market rally with a bounce in tech stocks
The U.S. stock market traded higher on Monday, September 11, 2023, as technology stocks staged a comeback after a recent slump. The Nasdaq Composite, which is heavily weighted with tech stocks, rallied 1.14% to close at 18,234.65 points, outperforming the other major indexes. The S&P 500 rose 0.67% to 5,321.78 points, while the Dow Jones Industrial Average added 0.25% to 37,892.43 points.
Some of the tech giants that boosted the Nasdaq were Tesla, Meta and Qualcomm. Tesla surged more than 10% after Morgan Stanley upgraded the stock to a top pick and updated its price target for the electric vehicle company, implying an upside of more than 60%. Meta popped 3.25% as the Wall Street Journal reported the company is developing a new artificial intelligence system as advanced as OpenAI’s model. Qualcomm jumped almost 4% on the news that it will continue supplying Apple with modems through 2026.
High bond yields pose no threat to the tech rally
Notably, tech stocks rallied even as the 10-year U.S. Treasury yield climbed around nine basis points to 4.294%. Higher bond yields typically weigh down growth-focused tech stocks because they increase the cost of borrowing and lower the value of future earnings. But tech stocks defied that relationship on Monday, showing resilience and optimism amid rising inflation and interest rate expectations.
Some analysts attributed the tech rally to a rotation from value to growth stocks, as investors sought to take advantage of the lower valuations of some tech names after the recent sell-off. Others pointed out that tech stocks have strong fundamentals and growth prospects that can withstand higher yields in the long run.
JPMorgan Chase CEO warns of risks to the U.S. economy
Despite the upbeat mood in the market, JPMorgan Chase CEO Jamie Dimon warned that it would be “a huge mistake” to think that the U.S. economy will boom for years. He said that the economy is currently supported by a strong consumer, but there are several risks that could derail the growth momentum, such as tighter monetary policy, the Ukraine war and governments “spending like drunken sailors”.
“Things change, and we don’t know what the full effect of all this is going to be 12 or 18 months from now,” Dimon said in an interview with CNBC on Monday.
He also expressed concern about the rising debt levels in the U.S., saying that they could pose a threat to the country’s fiscal stability and credit rating in the future.
Luckin Coffee surpasses Starbucks in China
In other news, Luckin Coffee announced that it has surpassed Starbucks as the largest coffee chain in China, with 10,829 stores as of August 31, 2023. Starbucks has 6,480 stores in China as of June 27, 2021, according to its latest quarterly report.
Luckin Coffee, which was founded in 2017, has achieved rapid growth by adopting a franchise model, offering low prices and operating self-service stores that rely on mobile ordering and delivery. The company also survived a major accounting scandal in 2020 that led to its delisting from Nasdaq and a $180 million fine from the U.S. Securities and Exchange Commission.
Luckin Coffee said that it plans to open more stores in China and expand into overseas markets such as Southeast Asia and Europe.
