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The Nasdaq closes sharply higher as Tesla flies on optimism about artificial intelligence

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By Noel Randewich and Shristi Achar A

(RockedBuzz via Reuters) – The Nasdaq closed sharply higher on Monday as Tesla reported strong optimism about artificial intelligence and investors awaited inflation data due this week.

Tesla rallied 10% after Morgan Stanley upgraded the electric car maker to “overweight” from “equal weight,” saying its Dojo supercomputer could boost the company’s market value by nearly $600 billion .

Other megacaps also rose, with Amazon up 3.5% and Microsoft up 1.1%.

Meta Platforms jumped 3.25% after a report on Sunday said the social media platform was working on a new, more powerful artificial intelligence system.

Walt Disney gained 1.2% and Charter Communications rose 3.2% after reaching a deal for Disney programming, including ESPN, to return to the Spectrum cable service hours before the start of “Monday Night Football” of the NFL.

Investors are watching August consumer price index data, due Wednesday, for clues about how close the Federal Reserve may be to the end of its interest rate hike campaign. Producer price data will follow on Thursday.

A New York Fed survey showed Americans’ overall views on inflation remained little changed in August, as they expected rising housing and food costs while expecting bleaker personal financial health.

“What we’re seeing is very positive sentiment that is actually tied to the upside regarding likely CPI and PPI numbers more in line with moderation,” said Greg Bassuk, managing director at AXS Investments in New York.

“As long as inflation data for August remains within the range of expectations, we will see the Fed abandon further rate hikes.”

Wall Street posted weekly losses on Friday after a recent rise in oil prices and stronger-than-expected economic data fueled concerns of sticky inflation and interest rates remaining higher for a longer period.

According to the CME’s FedWatch Tool, traders see a 93% chance that the central bank will keep its interest rates at current levels at its September meeting, while the odds of a pause in November are 57%.

Fed officials have entered a blackout period, during which they typically do not make public comments, until the Sept. 20 policy decision.

The S&P 500 index rose 0.67% to close at 4,487.46 points.

The Nasdaq gained 1.14% to 13,917.89 points, while the Dow Jones Industrial Average rose 0.25% to 34,663.72 points.

Volume on U.S. exchanges was relatively light, with 9.3 billion shares traded, compared to an average of 10.0 billion shares over the previous 20 sessions.

Of the 11 S&P 500 sector indexes, nine rose, led by consumer discretionary, up 2.77%, followed by a 1.17% gain in communications services.

Qualcomm rose 3.9% after the chipmaker signed a new deal with Apple to supply 5G chips to the iPhone maker until at least 2026.

Hostess Brands rose 19.1% after JM Smucker said it would buy the Twinkies maker in a $5.6 billion deal.

Within the S&P 500 Index, advancing issues outnumbered declining ones by a ratio of 1.5 to one.

The S&P 500 recorded 14 new highs and 11 new lows; the Nasdaq recorded 36 new highs and 199 new lows.

(Reporting by Ankika Biswas, Shreyashi Sanyal and Shubham Batra in Bangalore and Noel Randewich in Oakland, California; Editing by Arun Koyyur, Vinay Dwivedi and Richard Chang)