FEPI, PSI Rise on Micron Upgrade; FTXL, SHOC Surge on Intel News

Big tech and semiconductor ETFs rose Monday, as traders looked to build on the sharp gains seen last week following the Federal Reserve’s interest rate cut.

The REX FANG & Innovation Equity Premium Income ETF (FEPI) and Invesco Dynamic Semiconductors ETF (PSI) both advanced over 0.4% after Micron Technologies rose 2.7%. JPMorgan reiterated its overweight rating on Micron ahead of its Wednesday’s earnings, with analysts anticipating strong AI and server demand.

The First Trust Nasdaq Semiconductor ETF (FTXL) and the Strive U.S. Semiconductor ETF (SHOC) both climbed about 4% following Intel-related news. Intel shares jumped after reports that Apollo Global Management proposed a multibillion-dollar investment, following Friday’s rumors of Qualcomm approaching Intel about a takeover.

The Consumer Discretionary Select Sector SPDR Fund (XLY) rose nearly 1.1% as Tesla shares gained 4.8%. Barclays reiterated its equal weight rating on Tesla, suggesting better-than-expected third-quarter delivery numbers could be positive. The T-Rex 2X Long Tesla Daily Target ETF (TSLT) surged more than 9%.

The iShares U.S. Aerospace & Defense ETF (ITA) moved up 1.4% after Boeing shares rose 2%. Boeing presented a “best and final offer” to striking union machinists, including 30% pay raises over four years, up from the previously rejected 25% increase.

Broad equity markets, represented by the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ), advanced Monday as investors absorbed last week’s interest rate cut.

Volatility throughout the week will depend on upcoming key economic indicators on inflation and economic growth, which will have market watchers forecasting the Fed’s next move on interest rates.

Investors are eyeing a possible unusual gain for stocks this month, which would make this the first September gain in five years, Morningstar said.

SPY and QQQ rallied by nearly 2% and 3%, respectively, on last Wednesday’s 50-basis point rate cut. SPY, the world's largest exchange-traded fund, has gained 2% so far this month.

The yield on the 10-year Treasury bond, which also spiked on the rate cut announcement, was hovering around 3.73% just before 2 p.m. Eastern time Monday after opening at nearly 3.8%.

Meanwhile, the iShares 20+ Year Treasury Bond ETF (TLT), which is down 2.5% over the past five trading days, eked into positive territory Monday with a mid-day gain of 6 basis points.

Broad markets rose Monday shortly after noon ahead of key economic data to be released this week. 

SPY, the SPDR S&P 500 ETF Trust gained 0.3%% while DIA, the SPDR Dow Jones Industrial Average ETF Trust inched 0.1% higher. 

The Fed's preferred inflation gauge, the personal consumption expenditures index (PCE) is slated to be released on Friday morning. The inflation figure will give investors insight into the future path of rate cuts from the Fed. The more that inflation falls, the more comfortable the central bank will be to lower interest rates.

On Thursday, the Commerce Department will also release the latest data on gross domestic product (GDP). Investors are concerned that economy is slowing and may be headed for a recession—Thursday's release may fan those flames or ease investor anxieties.

Investors also took interest in small and mid-cap companies that don't belong to the group of mega-cap names that have dominated some of the gains made in the market so far this year. RSP, the Invesco S&P 500 Equal Weight ETF edged 0.3% higher.

Tech ETFs that heavily invest in the "Magnificent Seven" also gained. QQQ, the tech-heavy Invesco QQQ Trust rose 0.4%. MAGS, the Roundhill Magnificent Seven ETF notched a 1% gain. XLY, the Consumer Discretionary Select Sector SPDR Fund jumped 0.6%. More than 30% of the fund is comprised of Amazon, and Tesla, two Magnificent Seven companies.