The Nasdaq and the S&P 500 hit record highs on Monday, while the Dow scaled a more than one-month high as investors awaited a key inflation report, Congressional testimony from Federal Reserve Chair Jerome Powell and the start of earnings season this week.
Expectations for interest-rate cuts as early as September received a boost after Friday’s nonfarm payrolls report showed U.S. job growth slowed in June, the latest data to point to weakness in labor market conditions.
Investors, however, will seek a clearer picture of the Fed’s likely monetary policy trajectory for the rest of the year.
Traders now see a 74% chance of a 25-basis-point cut in September, up from last week’s 60%, while expecting an overall reduction of about 50 bps for the year, according to CME’s FedWatch and LSEG data.
On the economic front, this week’s consumer and producer price index data will be closely watched to gauge whether price pressures are easing.
Nasdaq gains on megacap boost as markets assess payrolls data
“The fact of the matter is the Fed has a dual mandate and their mandate is employment and inflation. Inflation is going down and unemployment is going up,” said Thomas Hayes, chairman at 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 the Nasdaq closed at all-time highs as megacap tech stocks such as Meta Platforms and Microsoft touched record peaks.
However, megacaps including Alphabet, Amazon.com and Meta Platforms shed between 0.4% and 1.3%. Tesla fell 2.4% after jumping to its
highest level this year on Friday.
Chip stocks Nvidia, Intel, Marvell Technology, Advanced Micro Devices and Qualcommjumped between 1% and 5%, helping the Philadelphia SE
Semiconductor Index gain 2%.
Major banks including Citigroup, JPMorgan Chase and Wells Fargo are slated to kick off the second-quarter earnings season on Friday. Their shares rose nearly 1% each on the day.
American Dollar Exchange Rate