US stocks rose on Monday, looking to resume a rally. This rally was spurred by the Federal Reserve’s message that interest rate cuts are imminent. Investors are gearing up for a busy week, particularly with Nvidia’s (NVDA) earnings report on the horizon.
US stocks rose on Monday – Market Overview
The S&P 500 (^GSPC) added roughly 0.1%. Meanwhile, the Dow Jones Industrial Average (^DJI) increased by about 0.2%. However, the tech-heavy Nasdaq Composite (^IXIC) slipped by 0.1%. All major indexes gained more than 1% for the week, highlighting a strong performance overall.
Stocks are edging toward fresh record highs. Chair Jerome Powell made it clear that the Fed is ready to pivot to lowering rates in September. The S&P 500 index is now less than 1% away from surpassing the all-time closing high set in July.
Rate-Cut Expectations
Markets quickly moved to price in cuts totaling 1% by the end of 2024. However, with only three Fed meetings left this year—scheduled for September, November, and December—Wall Street is eager to see when and if a 0.5% cut is likely. The upcoming August jobs report will play a crucial role in shaping these expectations.
Focus on Nvidia Earnings
The spotlight is firmly on Nvidia earnings, which are the marquee event of the week. The results, set to be announced on Wednesday, will likely determine whether the market mood remains upbeat. If Nvidia’s results fail to meet sky-high expectations, it could dent the AI trade that has powered stock gains. This outcome may put the market’s rebound from August lows to the test.
US stocks rose on Monday- Upcoming Economic Indicators
Additionally, a Friday update on the Fed policymakers’ preferred inflation gauge, the PCE index print, will influence rate path calculations. On Thursday, a reading on second-quarter GDP will also be released, further shaping market sentiments.
Oil Prices Surge
Elsewhere, oil prices jumped almost 3%. This increase is attributed to reports of production shutdowns in Libya and fears of escalating tensions in the Middle East. Both Israel and Hezbollah recently launched strikes, contributing to market uncertainty. Global benchmark Brent crude futures (BZ=F) rose to $81.81 a barrel, while US benchmark WTI crude futures (CL=F) traded at $76.90 a barrel.
S&P 500 Rises Towards Record High
The S&P 500 (^GSPC) rose 0.3% on Monday, inching closer to its July record highs. The index is now less than 0.5% away from its all-time record close of 5,667.20, set on July 16. This upward trend reflects investor optimism and growing confidence in the market’s recovery.
The Dow Jones Industrial Average (^DJI) also rose by 0.3% on Monday. Meanwhile, the Nasdaq Composite (^IXIC) drifted just above the flatline after opening slightly lower. Overall, the market’s performance indicates a cautious optimism as investors await critical economic data and corporate earnings reports.
US stocks rose on Monday, looking to resume a rally – Conclusion
In summary, the US stock market is poised for potential growth as interest rate cuts loom on the horizon. While the S&P 500 inches closer to record highs, the focus remains on Nvidia’s upcoming earnings report and other economic indicators that could influence market dynamics. As investors navigate this uncertain landscape, the interplay of interest rates, corporate earnings, and geopolitical events will be crucial in shaping future market trends.
