The S&P 500 and the Nasdaq rose on Monday, led by mega-cap stocks, as growing bets on a Federal Reserve rate cut in December fueled gains and investors hunted fresh data for clues on the central bank’s next move.
Dovish remarks from influential New York Fed President John Williams offered some respite on the policy front last week but was also a reflection on how divided policymakers were ahead of December’s FOMC meeting.
Investors are pricing in a nearly 80% chance the central bank will deliver a 25-basis-point interest rate cut next month, compared with 42% a week earlier, according to CME Group’s FedWatch Tool.
“The dominant theme for now remains uncertainty. We’re going to remain in a choppy market up until December 10 when we get the Fed’s decision and the commentary that goes around it,” said Lilian Chovin, head of asset allocation at Coutts.
Mega-cap stocks were in the lead, with Alphabet up 5.7% and Tesla gaining 4.4%. Four of the 11 S&P 500 sub-sectors were higher.
At 09:44 a.m. ET, the Dow Jones Industrial Average rose 6.02 points, or 0.01%, to 46,251.43, the S&P 500 gained 47.79 points, or 0.72%, to 6,650.78 and the Nasdaq Composite gained 332.20 points, or 1.49%, to 22,605.29.
CONSUMER RESILIENCE IN SPOTLIGHT AS HOLIDAY SEASON KICKS OFF
September retail sales and producer prices data are expected this week, ahead of the holiday shopping season that starts with the Thanksgiving holiday on Thursday, extending into Black Friday and Cyber Monday.
“We’re going to look at spending at different levels of wealth to see whether different types of consumers are holding off better than others,” Chovin said.
Spending trends are coming under sharper scrutiny as a flurry of layoff announcements, rising unemployment data and U.S. tariffs cloud consumer sentiment. Even so, the National Retail Federation expects holiday sales to top $1 trillion for the first time.
Earnings from consumer-oriented companies such as Best Buy are expected later this week.
TECH VALUATION WORRIES PERSIST
Despite AI-bellwether Nvidia’s strong forecast last week, ballooning valuations of the tech sector has plagued markets for much of this month.
Stocks hit a volatile patch this month as investors worried the AI boom may be morphing into a bubble, while a prolonged U.S. government shutdown starved Wall Street of data it relies on to gauge the health of the world’s largest economy.
The S&P 500 and Nasdaq were headed for monthly losses in November and were on track for their steepest declines since fears of a tariff hike sparked a selloff in March.
Deutsche Bank lifted some of the gloom, projecting the S&P 500 would surge to 8,000 by the end of 2026, citing resilient corporate earnings and AI‑driven gains – the most bullish call among major global brokerages.
Meanwhile, Bristol-Myers gained 3.8% after European rival Bayer unveiled positive late-stage data for its cardiovascular drug.
Some U.S. health insurers and hospital operators gained after a report said Trump’s health plan could see subsidy extensions for two years.
Centene rose 6.8%, while Oscar health surged 19%.
Declining issues outnumbered advancers by a 1.01-to-1 ratio on the NYSE, while advancing issues outnumbered decliners by a 1.48-to-1 ratio on the Nasdaq.
The S&P 500 posted 12 new 52-week highs and one new low, while the Nasdaq Composite recorded 53 new highs and 43 new lows.
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