Wall Street reached new heights on Monday, suggesting the recent rally in the U.S. stock market might either be a sign of optimism or an overvaluation. The S&P 500 gained 0.5%, surpassing its previous record set just last week, while the Dow Jones Industrial Average edged up by 49 points, or 0.1%. The Nasdaq composite outperformed, rising 0.9% to achieve a new benchmark.
A major contributor to this bullish trend was Tesla, whose shares jumped 3.6% after CEO Elon Musk made a significant investment by purchasing about $1 billion in stock through a trust. This move may signal Musk’s continued confidence in the electric vehicle maker, which had begun the day with a slight loss year-to-date.
Meanwhile, Alphabet, parent company of Google, was the standout performer within the S&P 500, soaring 4.5% and pushing its market valuation above $3 trillion. Only Nvidia, Microsoft, and Apple are similarly valued on Wall Street.
The Federal Reserve’s upcoming interest rate decision on Wednesday looms large over the market. Analysts widely expect this to be the first rate cut of the year, a change that could invigorate the labor market, which has shown signs of slowing. Market sentiment has already been buoyed by anticipations of a rate cut. Should the Fed’s actions fail to meet these expectations, it could result in a sharp decline in stock prices.
In addition to the rate decision, much attention will be directed at Fed Chair Jerome Powell’s comments following the announcement. The Federal Reserve will also provide updated projections regarding interest rates and economic growth for coming years, which could be pivotal for market reactions.
The Fed remains cautious due to the potential impact of inflation spurred by tariffs imposed during President Donald Trump’s administration. Lower interest rates could exacerbate inflation, which has struggled to stay below the Fed’s 2% target. Conversely, a substantial slowdown in the job market could lead to a recession, undermining corporate profits, which would negate the short-term benefits of rate cuts.
Trump has been vocally critical of the Fed, insisting on immediate and substantial rate cuts. His social media remarks on Monday urged, “’Too Late’ must cut interest rates now, and bigger than he had in mind,” referencing Powell in his characteristic all-caps style.
In other notable stock movements, Intel experienced a 2.9% increase after revising its expense forecast following the sale of a controlling stake in its Altera business. Contrastingly, Hain Celestial’s shares plummeted by 24.7% after it reported a quarterly loss larger than the previous year.
Alaska Air Group’s stock fell 6.7% as the airline predicted that rising fuel costs would lead to disappointing third-quarter results, compounded by increased expenditures related to weather-related disruptions. While it did see a positive trend in airfare due to strong demand for premium seating.
Nvidia’s stock saw a slight dip of less than 0.1% amid scrutiny from Chinese regulators over alleged antimonopoly violations, although no immediate penalties were imposed.
Overall, the S&P 500 rose 30.99 points to finish at 6,615.28. The Dow gained 49.23 points, closing at 45,883.45, while the Nasdaq composite climbed 207.65 points, reaching 22,348.75. In the bond markets, Treasury yields eased as expectations for Fed rate cuts continued to grow, with the 10-year Treasury yield falling to 4.03%.
In the broader economic landscape, a troubling report indicated shrinking manufacturing activity in New York state, contrary to the expectation of growth, marking the first contraction since June. The next key data release will be on Tuesday, detailing U.S. retail spending from the previous month.
International markets reflected a mix of sentiments, with France’s CAC 40 rising 0.9%, while other European and Asian indexes showed more modest movements.
