Stocks advanced predominantly during Monday's trading session, building on the significant gains from last week. Although the major indices showed indecision early on, they ultimately moved solidly into positive territory as the day progressed.
The major indices surged in the final hour of trading, with the Nasdaq and S&P 500 closing near their session highs. The Nasdaq climbed 245.05 points, or 1.3%, to settle at 17,876.77, the S&P 500 rose 54.00 points, or 1.0%, to 5,608.26, and the Dow increased by 236.77 points, or 0.6%, to close at 40,896.53.
The upward momentum on Wall Street was bolstered by the continued positive trend observed in the major indices over the past sessions. Both the Nasdaq and S&P 500 closed higher for the eighth consecutive session, effectively counterbalancing the sharp declines from earlier this month.
Investor sentiment was further buoyed by recent data that allayed concerns about the economic outlook and heightened confidence in a potential Federal Reserve interest rate cut next month.
According to the CME Group's FedWatch Tool, there is a 75.5% likelihood of a quarter-point rate cut next month and a 24.5% probability of a half-point cut.
Later this week, the minutes from the Federal Reserve's latest monetary policy meeting could provide further insight into interest rate expectations. Additionally, remarks by Fed Chair Jerome Powell and other officials at the Jackson Hole Economic Symposium will be closely monitored.
"September is being tipped as the month for that first Fed cut after inflation finally dropped below 3%," noted Danni Hewson, Head of Financial Analysis at AJ Bell. "Questions now center on how far Jay Powell and the FOMC will go, the magnitude of the first cut, and whether it will be the only one this year."
Hewson added, "Concerns that the Fed had been too slow have eased somewhat, but every statement at this week's Jackson Hole Symposium will be closely scrutinized."
In U.S. economic news, the Conference Board reported a greater-than-expected decline in leading U.S. economic indicators for July. The leading economic index fell by 0.6% in July, following a 0.2% dip in June, while economists had forecast a 0.3% decrease.
The report also indicated the index dropped by 2.1% over the six months ending in July 2024, a slower rate of decline compared to the 3.1% fall during the six months from July 2023 to January 2024.
"The LEI continues to fall on a month-over-month basis, but the six-month annual growth rate no longer signals recession ahead," stated Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.
Sector Performance
Biotechnology stocks saw a significant increase, with the NYSE Arca Biotechnology Index rising 2.2% to reach its highest closing level in nearly three years.
Gold stocks also exhibited considerable strength, as the NYSE Arca Gold Index advanced 2.1% amidst a moderate rise in gold prices, hitting a two-year closing high.
Semiconductor stocks performed well, propelling the Philadelphia Semiconductor Index up by 1.9%.
Other sectors showing notable strength included housing, natural gas, and airline stocks, which all posted gains alongside most major sectors.
Other Markets
In international markets, the Asia-Pacific region displayed mixed results on Monday. Japan's Nikkei 225 Index dropped by 1.8%, while China's Shanghai Composite Index increased by 0.5%.
European markets, however, moved upward. The French CAC 40 Index rose by 0.7%, the U.K.'s FTSE 100 Index gained 0.6%, and Germany's DAX Index grew by 0.5%.
In the bond market, treasuries advanced on optimism regarding the interest rate outlook, leading to a 2.5 basis point decline in the yield on the benchmark ten-year note, which fell to 3.867%.
Looking Ahead
With a dearth of significant U.S. economic data on Tuesday, trading may be volatile as investors anticipate the release of the Fed minutes and the upcoming Jackson Hole symposium.
