The S&P 500 reached a new record high on Monday. Tesla’s stock jumped, helping lift the market. Investors are looking ahead to a rate cut expected from the Federal Reserve later this week.
By 1:10 p.m. ET, the Dow Jones was up slightly by 9 points. The S&P 500 rose 0.4% to 6,619.07, a record. The Nasdaq gained 0.8%. All three major indexes hit record highs last week, thanks to growing confidence that the Fed will cut rates.
The Fed will be the center of attention this week. Most investors expect a rate cut when the Fed finishes its two-day meeting on Wednesday. Signs of a softer U.S. labor market make a cut likely. Lower rates can encourage businesses to invest and hire.
Data on Monday showed the NY Empire manufacturing index fell sharply to -8.7 in September from 11.9 in August, suggesting slowing activity. But a small rise in weekly jobless claims keeps the case for a rate cut strong.
A rate cut can also risk boosting inflation. Last week’s U.S. consumer price index showed a slight increase because housing and food costs went up, hinting inflation may stay stubborn. Right now, there’s about a 95% chance of a 0.25% cut and a 5% chance of a bigger 0.5% cut. The current target rate is 4.25% to 4.5%. Investors are also watching Fed projections and Chair Jerome Powell’s comments for clues on future policy.
In stocks, Nvidia recovered after losses even though China’s regulators extended an antitrust probe against the chipmaker. Oracle shares jumped after raising its cloud revenue forecast and announcing big AI contracts, boosting tech stocks. Tesla soared after Elon Musk bought over 2.5 million shares in his company.
On the international front, U.S. Treasury Secretary Scott Bessent said a framework was reached in talks with China that could allow TikTok to switch to U.S. ownership.