Dow closes at record high as Fed-fueled rally continues on Wall Street

The Dow hit an all-time high Monday, tuned negative but still managed a record close, as investors awaited inflation data for clues about the path of interest-rate cuts by the Federal Reserve.

The Dow Jones Industrial Average surged as much as 245 points to an intraday record of 41,420 before paring gains. Its previous record high was 41,376, reached on July 18.

The blue chip index closed up 65.44 points, or 0.2% to 41,240, breaking its previous record close of 41,198.08 on July 17. The S&P 500 fell 0.3%, and the Nasdaq slipped 0.9%.

Nvidia dropped 2.3% ahead of its report on Wednesday in what is set to be the US stock market’s most closely watched event of the week.

Some investors worried that anything short of a stellar forecast from Nvidia could shatter Wall Street’s rally in AI-related companies, including Microsoft, Alphabet and Meta Platforms.

“Nvidia could disappoint. I think when you get to the point where the majority doesn’t even suspect that there could be a piece of bad news, that’s typically where you get it,” warned Jake Dollarhide, chief executive of Longbow Asset Management in Tulsa, Okla.

US-listed shares of PDD Holdings tumbled 29% after the Temu-owner missed market expectations for second-quarter revenue.

Of the 11 S&P 500 sector indexes, six declined, led lower by information technology and consumer discretionary.

The energy sector index jumped 1% following reports of oil supply disruptions amid the geopolitical conflict in the Middle East lifted crude prices. 

Wall Street rallied on Friday, with the S&P 500 nearing record highs after Fed Chair Jerome Powell said “the time has come” to lower borrowing costs in the light of a diminishing upside risk to inflation and moderating labor demand.

Money markets suggest traders see a 70% chance of a 25 basis point interest rate cut and a 30% chance of a 50 basis point cut in September, according to the CME Group’s FedWatch tool.

Friday’s highly anticipated Personal Consumption Expenditure data for July, the central bank’s preferred inflation gauge, could provide more insight into the policy easing trajectory.

Results from Dell, Salesforce, Dollar General and Gap are on tap this week.

Boeing slipped 0.9% after NASA picked SpaceX over the planemaker’s Starliner to return its astronauts from space next year.