The Dow and S&P 500 closed at records on Monday as investors assessed whether a trend will develop in the week following the Federal Reserve’s rate cut.
The Dow Jones Industrial Average rose 61.29 points, or 0.2% to 42,124.65 — its third straight record close. The blue chip index hit an intraday record high of 42,190.05.
The S&P 500 gained 0.3% to a record close of 5,718.57, and the Nasdaq edged up 0.2%.
The gains come amid comments from Fed policymakers and steady factory activity data, building on last week’s sharp market rally after the central bank’s decision to lower interest rates.
The Fed’s pivotal move last week lifted major indexes to monthly gains, defying the historical trend of September as a weak month for equities.
Comments from a number of policymakers were the main focus on Monday as investors searched for clues on why the central bank kicked off its easing cycle with an outsized 50 basis-point cut.
Fed officials including 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 swayed since then and now appear to be a coin-toss, with markets expecting a total reduction of 74 basis points by year-end, according to LSEG data.
On the data front, US business activity remained steady in September, while average prices for goods and services increased at the fastest pace in six months, potentially signaling a rise in inflation in the months ahead.
“I think investors are still just sort of taking a wait-and-see attitude, if indeed a soft landing is the most likely outcome.” said Sam Stovall, chief investment strategist of CFRA Research in New York.
Among rate-sensitive growth stocks, Elon Musk’s Tesla jumped 4.9%, while Meta Platforms rose 0.6% after Citigroup lifted its price target on the stock. Musk on Monday met Argentina President Javier Milei, who rang the opening bell at the New York Stock Exchange.
The Russell 2000 index, tracking small caps, was off 0.3%.
All eyes are on Friday’s personal consumption expenditure figure for August – the Fed’s preferred inflation gauge. Analysts indicate this release will be the week’s most significant catalyst.
Among top movers, Intel rose 3.3% after a report showed Apollo offered to make an investment of as much as $5 billion in the chipmaker.
General Motors slipped 1.7% after Bernstein downgraded the carmaker’s stock to “market perform” from “outperform.”
