The Nasdaq and S&P 500 hit record highs Monday, while the Dow reached a one-month high, as investors awaited key reports.
Advancing issues outpaced decliners by a 2.10-to-1 ratio on both the NYSE and Nasdaq.Interest-rate cut expectations rose after Friday’s nonfarm payrolls report showed June’s U.S. job growth slowing, indicating labor market weakness.
Investors, however, seek clarity on the Fed’s monetary policy direction for the rest of the year.
Traders now see a 74% chance of a September 25-bps cut, up from 60%, expecting a 50-bps yearly reduction.
This week’s consumer and producer price index data will be monitored to see if economic price pressures are easing.
“The fact is that the Fed has a dual mandate, which is to promote both employment and inflation. “Inflation is falling and unemployment is rising,” said Thomas Hayes, head of Great Hill Capital LLC.
“They now have cover to make a cut when they want to and signs point toward September.”
The S&P 500 and Nasdaq hit record highs as megacap tech stocks, including Meta and Microsoft, reached new peaks.
However, megacaps Alphabet, Amazon, and Meta dropped 0.4%-1.3%, while Tesla fell 2.4% after peaking on Friday.
Chip stocks, including Nvidia, Intel, and AMD, rose 1-5%, boosting the Philadelphia SE Semiconductor Index by 2%.
Key banks like Citigroup, JPMorgan Chase, and Wells Fargo will start Q2 earnings on Friday, with their shares up about 1%.
Despite the S&P 500 Financial Index leading, Communication Services lagged behind as the biggest sectoral loser.
The small-cap Russell 2000 rose roughly 1%.
Investors prioritize earnings to assess if soaring prices of megacap stocks like Nvidia are justified.
Investors will closely monitor Powell’s congressional testimony on July 9 and 10, along with remarks from other Fed officials throughout the week.
By 9:48 a.m. ET, the Dow rose 276.53 points to 39,652.40, the S&P 500 climbed 13.11 points to 5,580.30, and the Nasdaq gained 21.41 points to 18,374.17.
Paramount Global initially rose in premarket trading but later dropped 2.3% following news of merging with Skydance Media.
Boeing rose 2.3% after agreeing to a $243.6 million fine and pleading guilty to fraud in the 737 MAX crash investigation.
Advancing issues outpaced decliners by a 2.10-to-1 ratio on both the NYSE and Nasdaq.
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