Wall Street’s main indexes inched higher in choppy trading on Monday as investors focused on comments from Federal Reserve policymakers and factory activity data, following the central bank’s decision to commence monetary policy easing.
In recent trading, the Dow Jones Industrial Average rose 16 points to 42,079. The blue chip index closed Friday at a record of 42,063.36.
The S&P 500 gained 0.3,% and the Nasdaq climbed 0.4%. Having rallied for much of the year, the S&P 500 is a whisker away from an all-time high and the blue-chip Dow hit another intraday record high of 42,190.05.
The Fed’s pivotal move on monetary policy in the previous week propped up the main indexes for monthly gains, bucking a historical trend where September has been a weak month for equities on average.
Among rate-sensitive growth stocks, Tesla jumped 3.6%, Meta rose 1.2%, while Apple lost 0.5%.
The Russell 2000 index, tracking small caps, gained 0.2%.
Comments from a number of policymakers were the main focus on the day as investors scoured for clues on why the central bank kicked off its easing cycle with an outsized 50 basis points cut.
Atlanta Fed President and voting member Raphael Bostic said inflation and unemployment were nearing normal rates, suggesting an openness to a quick pace of upcoming cuts, while a report showed Minneapolis Fed President Neel Kashkari was eying around a further 50 bps reduction in rates by year-end.
Trader bets, as per the CME Group’s FedWatch tool, initially favored a larger Fed move at its upcoming November meeting, after Governor Christopher Waller on Friday flagged that upcoming inflation data could undershoot the Fed’s 2% target.
However, the bets now appear to be a coin toss, with markets expecting a total of 74.3 bps reduction by year-end as per LSEG data.
“The market is anticipating a lot more than the Fed is going to provide and for that reason, the market’s going to be volatile,” said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management.
“It’s a little bit of a pause considering the exuberance of last week. There’s nothing economic right now that’s spooking the market other than the Fed going a little further than anyone expected.”
On the data front, a preliminary survey showed September manufacturing and services activity stood at 47 and 55.4 respectively, compared with estimates of 48.5 and 55.2.
But the spotlight will be on Friday’s personal consumption expenditure figure for the month of August – the Fed’s preferred inflation gauge.
Among top movers, Intel rose 2.3% after a report showed Apollo offered to make an investment of as much as $5 billion in the chipmaker.
General Motors slipped 3.2% after Bernstein downgraded the carmaker’s stock to “market perform” from “outperform.”
