All three major U.S. stock indexes soared more than 1%, with the S&P 500 and the Dow closing a four-session losing streak, rebounding from their biggest weekly percentage losses since March 2022
U.S. stocks closed sharply higher on Monday and the dollar firmed as markets braced for key data and actions from central banks.
All three major U.S. stock indexes soared more than 1%, with the S&P 500 and the Dow closing a four-session losing streak, rebounding from their biggest weekly percentage losses since March 2022.
The tech-driven Nasdaq staged a comeback after suffering its biggest Friday-to-Friday decline since January 2022 last week.
The dollar firmed ahead of Wednesday’s much anticipated CPI report.
Two things are happening, said Greg Bassuk, CEO of AXS Investments in New York. Investors are putting cash back to work after last week’s over-selling, and secondly, everyone is bullish on a Fed rate cut.
There is a lot of dip-buying and Fed optimism today, Bassuk said.
Last week mixed data, particularly the August employment report, caused investors to dial back expectations that the U.S. Fed could issue an outsized 50 bp rate cut when it convenes for its policy meeting next week.
On Wednesday, the Labor Department’s CPI is expected to show underlying inflation remains on its meandering path back down toward the central bank’s 2% goal.
Financial markets are pricing a 71% possibility that the Federal Reserve will reduce its key policy rate by 25 bps at the end of next week’s meeting, with a 29% chance of a 50 bp cut, shows the CME’s FedWatch tool.
The Dow Jones Industrial Average gained 484.28 points, or 1.2%, to 40,829.69, the S&P 500 added 62.65 points, or 1.16%, at 5,471.07 and the Nasdaq Composite advanced 193.77 points, or 1.16%, at 16,884.60.
European stocks staged a comeback with the benchmark STOXX 600 retrieving from last week’s sharp declines as investors awaited an expected interest rate cut from the ECB later in the week.
Last week there was a lot of weak economic data in the U.S. and globally, and it had investors skittish over recessionary concerns, Bassuk added.
With dip-buying and greater confidence that many central banks are going to be moving from hawkish to dovish policy there is more optimism that the central banks can avoid a global recession, he said.
