Wall Street’s main indexes trended higher in choppy trading on Monday as investors focused on comments from Federal Reserve policymakers and steady factory activity data, following the central bank’s decision to commence monetary policy easing.
The Fed’s pivotal move on monetary policy in the previous week propped up the main indexes for monthly gains, bucking a historical trend where September has been a weak month for equities on average.
Comments from a number of policymakers were the main focus on the day as investors scoured for clues on why the central bank kicked off its easing cycle with an outsized 50 basis points cut.
Fed presidents such as Raphael Bostic, Neel Kashkari and Austan Goolsbee supported the central bank’s last rate cut and voiced support for more cuts in the rest of the year.
Trader bets, as per the CME Group’s FedWatch tool, initially favored a larger Fed move at its upcoming November meeting, after Governor Christopher Waller on Friday flagged that upcoming inflation data could undershoot the Fed’s 2% target.
However, the bets have since then swayed and now appear to be a coin toss, with markets expecting a total of 74 bps reduction by year-end as per LSEG data.
On the data front, U.S. business activity was steady in September, but average prices charged for goods and services rose at the fastest pace in six months, potentially hinting at a pickup in inflation in the coming months.
“It was good enough … and continues to drive the assumption that while the labor market is softening a bit, the economy still remains relatively robust,” said Art Hogan, chief market strategist at B Riley Wealth.
“Embedded in the soft landing scenario would be a Fed that’s able to tackle inflation without causing a recession. And thus far, that remains the case,” Hogan added.
At 11:44 a.m. the Dow Jones Industrial Average (.DJI), opens new tab rose 40.40 points, or 0.10%, to 42,103.76, the S&P 500 (.SPX), opens new tab gained 18.37 points, or 0.32%, to 5,720.92 and the Nasdaq Composite (.IXIC), opens new tab gained 54.95 points, or 0.31%, to 18,003.27.
Ten out of the 11 S&P 500 sectors were higher. Real estate stocks (.SPLRCR), opens new tab lead gains with a 0.9% rise, while healthcare stocks (.SPXHC), opens new tab declined 0.1%.
Having rallied for much of the year, the S&P 500 (.SPX), opens new tab is a whisker away from an all-time high and the blue-chip Dow (.DJI), opens new tab hit another intraday record high.
Among rate-sensitive growth stocks, Tesla (TSLA.O), opens new tab jumped 4.8%, while Meta (META.O), opens new tab rose 1% after Citigroup lifted its price target on the stock.
The Russell 2000 index (.RUT), opens new tab, tracking small caps, was off 0.3%.
Analysts said Friday’s personal consumption expenditure figure for August – the Fed’s preferred inflation gauge – will be the most important catalyst for the week.
Among top movers, Intel (INTC.O), opens new tab rose 2.2% after a report showed Apollo (APO.N), opens new tab offered to make an investment of as much as $5 billion in the chipmaker.
General Motors (GM.N), opens new tab slipped 3.1% after Bernstein downgraded the carmaker’s stock to “market perform” from “outperform”.
Advancing issues outnumbered decliners by a 1.41-to-1 ratio on the NYSE and by a 1.34-to-1 ratio on the Nasdaq.
The S&P 500 posted 56 new 52-week highs and one new low, while the Nasdaq Composite recorded 64 new highs and 81 new lows.
