By Caroline Valetkevitch
NEW YORK (Reuters) - The S&P 500 and Nasdaq eked out record closing highs on Monday, although investors were cautious ahead of this week's consumer prices report and a Federal Reserve policy announcement.
Providing some support to the Nasdaq and S&P 500, Nvidia (NASDAQ:NVDA) shares ended up 0.7%, the session after a 10-for-one stock split. Some investors now believe the chip maker might be included in the blue-chip Dow.
The Consumer Price Index report for May is due Wednesday along with the conclusion of the Fed's two-day policy meeting.
The central bank, which will release updated economic and policy projections, is expected to hold interest rates steady. Investors will look for clues on when the U.S. central bank may begin to cut interest rates.
"This is an important week for the market in terms of comments and messaging from the Federal Reserve," said Quincy Krosby, chief global strategist, LPL Financial (NASDAQ:LPLA) in Charlotte, North Carolina.
"In addition to that, you're going see Wednesday morning the CPI report. Anything related to the economy and anything related to inflation is viewed by the market through the lens of the Federal Reserve."
The Dow Jones Industrial Average rose 69.05 points, or 0.18%, to 38,868.04, the S&P 500 gained 13.8 points, or 0.26%, to 5,360.79 and the Nasdaq Composite added 59.40 points, or 0.35%, to 17,192.53.
Traders dialed back expectations for rate cuts in September after Friday's stronger-than-expected jobs data for May, with the odds of a reduction at 50%.
"I feel like it's going to be pretty muted as people try to hedge themselves for what they might see on Wednesday," said Alex McGrath, private wealth advisor at NorthEnd Private Wealth.
Apple shares (NASDAQ:AAPL) dipped 1.9% on the first day of the iPhone maker's annual developer conference. Investors are eager for updates on how it is integrating artificial intelligence into its offerings.
Among the day's gainers, Southwest Airlines (NYSE:LUV) jumped 7% after activist investor Elliott Investment Management disclosed it has built up a $1.9 billion position in the company.
Diamond Offshore Drilling (OTC:DOFSQ) shares climbed 10.9% after oilfield services company Noble said it would buy the smaller rival in a $1.59 billion deal. Noble shares rose 6.1%.
Advancing issues outnumbered declining ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored advancers.
The S&P 500 posted 19 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 56 new highs and 177 new lows.
Volume on U.S. exchanges was 10.39 billion shares, compared with the 12.80 billion average for the full session over the last 20 trading days.
(This story has been corrected to remove reference to Apple developer conference in paragraph 1 and bullet point and to read 'on the first day of the iPhone maker's annual developer conference' instead of ‘ahead of’ in paragraph 10)