U.S. equity markets saw modest gains Monday, adding to last week’s record-setting rally as investors await the Federal Reserve’s decision on interest rates later this week.
At 09:35 ET, the Dow Jones Industrial Average rose 45 points (0.1%), the S&P 500 added 23 points (0.4%), and the Nasdaq Composite climbed 130 points (0.6%). Wall Street’s major indexes reached new highs last week, driven by optimism over a likely Fed rate cut.
Fed rate cut in focus
All eyes are on the Federal Reserve as markets expect a reduction in borrowing costs at the conclusion of its two-day meeting on Wednesday. Signals of a softening U.S. labor market have strengthened speculation that this will be the first rate cut since December, when the Fed paused its easing cycle. Lower rates could, in theory, stimulate investment and hiring.
Monday data highlighted a decline in the NY Empire State Manufacturing Index to -8.7 in September from 11.9 in August, reflecting weakening activity.
Still, a rate cut could risk adding inflationary pressure. Last week, the U.S. consumer price index rose slightly due to higher housing and food costs, suggesting persistent inflation. Meanwhile, a separate gauge showing increased weekly jobless claims likely keeps the Fed on track for a rate reduction.
According to CME’s FedWatch Tool, there is about a 95% chance of a 25-basis-point cut and roughly a 5% probability of a 50-basis-point reduction. The Fed’s target rate remains in the 4.25%–4.5% range. Investors are also closely monitoring Fed Chair Jerome Powell’s remarks and the central bank’s updated projections for clues on policy through year-end.
Tech sector sees divergence
Technology stocks saw mixed performance Monday. Renewed investor enthusiasm for artificial intelligence boosted Oracle Corporation (NYSE:ORCL) after it raised its cloud revenue forecast and secured major AI contracts.
However, Nvidia (NASDAQ:NVDA) shares fell after China’s antitrust regulator announced it would extend its probe into the U.S. chipmaker, citing preliminary evidence of competition law violations.
Other market movers included Tesla (NASDAQ:TSLA), which jumped following CEO Elon Musk’s disclosure that he purchased over 2.5 million shares, according to SEC filings. Additionally, U.S. Treasury Secretary Scott Bessent confirmed that a framework for a TikTok deal had been reached in trade negotiations with China, potentially opening the path for U.S. ownership.
Oil gains on potential supply interruptions
Oil prices climbed Monday amid concerns over Russian supply disruptions after Ukrainian drone attacks on Moscow’s energy facilities.
Brent crude futures rose 0.6% to $67.42 a barrel, while U.S. West Texas Intermediate added 0.8% to $63.20 a barrel. Both contracts gained more than 1% last week as Ukraine targeted Russia’s Primorsk oil export terminal and the Kirishinefteorgsintez refinery, one of the nation’s largest. Analysts warn these strikes could reduce Russian oil output and affect key markets such as India and China.
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