U.S. equities moved slightly upward Monday, building on recent gains as investors await the conclusion of the Federal Reserve’s policy meeting later this week.
By 09:35 ET, the Dow Jones Industrial Average had added 45 points, or 0.1%, the S&P 500 rose 23 points, or 0.4%, and the Nasdaq Composite climbed 130 points, or 0.6%. All three major indexes set record highs last week, reflecting growing market confidence that a Fed rate cut is imminent.
Markets focused on potential Fed cut
The Federal Reserve takes center stage this week, with expectations high that the central bank will lower interest rates at the close of its two-day meeting on Wednesday. Indicators of a cooling U.S. labor market have strengthened speculation that this could be the first rate reduction since the easing cycle was paused in December. Lower rates, in theory, could stimulate both hiring and investment.
Monday morning data revealed a drop in the NY Empire State Manufacturing Index, falling to -8.7 in September from 11.9 in August, signaling weakening activity.
Yet reducing rates carries the risk of boosting inflationary pressures. Last week’s U.S. consumer price index showed slight acceleration, driven by increases in housing and food costs, hinting that inflation could remain sticky. Meanwhile, a rise in weekly initial jobless claims likely kept the Fed on track for a rate cut.
According to CME’s FedWatch Tool, there is roughly a 95% probability of a 25-basis-point reduction and about a 5% chance of a half-point cut. The Fed’s target rate currently sits between 4.25% and 4.5%. Investors are also closely watching updated projections and Fed Chair Jerome Powell’s remarks for guidance on monetary policy for the remainder of the year.
Tech sector sees mixed movements
Renewed enthusiasm around artificial intelligence helped support equities last week. Oracle Corporation (NYSE:ORCL) shares jumped after raising its cloud infrastructure revenue forecast and announcing large AI contracts, boosting tech stocks broadly.
However, Nvidia (NASDAQ:NVDA) shares retreated after China’s market regulator announced it would extend its antitrust probe, citing preliminary evidence that the U.S. chipmaker violated competition laws.
In other corporate news, U.S. Treasury Secretary Scott Bessent confirmed that a framework for a TikTok deal had been reached in trade talks with China, potentially paving the way for a shift to U.S. ownership. Tesla (NASDAQ:TSLA) also surged after CEO Elon Musk disclosed a purchase of more than 2.5 million shares, according to a SEC filing.
Oil prices climb on potential Russian supply disruptions
Crude oil extended gains Monday as markets weighed the risk of supply disruptions following Ukrainian drone attacks on Moscow’s energy infrastructure.
By 09:35 ET, Brent futures rose 0.6% to $67.42 a barrel, while U.S. West Texas Intermediate crude added 0.8% to $63.20 a barrel. Both benchmarks gained over 1% last week as Ukraine targeted Russia’s largest oil export terminal, Primorsk, and the Kirishinefteorgsintez refinery, one of the country’s two biggest. Analysts warn these strikes could limit Russian oil output, affecting major export markets such as India and China.
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