Wall Street’s three main stock indexes jumped on Monday after a week of losses as investors looked for bargains while they waited for inflation reports in coming days and the Federal Reserve’s next policy decision next week.
The Dow Jones Industrial Average soared more than 600 points before closing up 484.18 points, or 1.2%, to 40,829.59. The S&P 500 gained 1.2%, and the Nasdaq also advanced 1.2%. or 193 points.
This week’s key events include the consumer price index report, due Wednesday morning after Tuesday night’s first debate between presidential candidates Democrat Kamala Harris and Republican Donald Trump ahead of the Nov. 5 election.
Global markets were rattled last week as concerns over the US economy’s health added fuel to uncertainty about the Fed’s rate policy ahead of its policy decision due Sept. 18.
Friday’s weaker-than-expected August jobs data spurred worries about the labor market, resulting in the Nasdaq Composite’s biggest weekly drop since January 2022, and the S&P 500 biggest weekly loss since March 2023.
“You had an over sold condition last week. There’s not anything significant today that would change the narrative. You’ve some high quality stocks that are cheaper,” said Phil Blancato, chief market strategist at Osaic Wealth, in New York.
In particular Blancato pointed to a more than 3% boost in shares of market heavyweight and artificial intelligence chipmaker favorite Nvidia, which fell 15% last week.
But since trading is usually more muted before big economic news, the strategist was concerned to see a rally before Wednesday’s CPI inflation report, which is expected to help inform whether the Fed cuts rates by 25 or 50 basis points.
“The market’s expecting a very soft print and locking in a Fed cut. What happens if we don’t get that?” said Blancato who expects volatility after whatever decision the Fed makes.
Some investors will be disappointed if the Fed only cuts rates by 25 basis points but if the cut is double that, they will be worried that the Fed has big concerns about the economy.
“It’s a lose-lose situation,” the strategist said.
Wednesday’s report is expected to show a moderation in headline inflation in August to 2.6% on a yearly basis, while on a monthly basis it is expected to remain unchanged at 0.2%. The CPI report will be followed by producer prices data on Thursday.
Apple shares were flat after it unveiled its artificial intelligence-boosted iPhone 16.
Apple’s long-awaited phone launch came hours after Chinese rival Huawei began racking up orders for its tri-fold Mate XT phone.
Boeing advanced 3.3% after the planemaker and its biggest union reached a tentative deal covering more than 32,000 workers, averting a possible strike.
Palantir rose 14% and Dell Technologies rose 3.8% while Erie fell 0.6% on the news issued late Friday they will all join the S&P 500 index on Sept. 23.
In the benchmark index, these stocks will replace American Airlines Group, up 3.9%, Etsy, down 1.6% and Bio-Rad Laboratories, which was down 2%.
