U.S. stocks rose on Monday as Wall Street moved closer to its record highs after a tumultuous summer. The S&P 500 surged 1% to mark its eighth consecutive gain, its longest winning streak since November. The Dow Jones Industrial Average also gained 0.6%, while the Nasdaq composite jumped 1.4%. Advanced Micro Devices announced it would acquire ZT Systems in a deal worth $4.9 billion, boosting the chip company’s stock by 4.5%. Another chip company, Nvidia, was a significant force pushing the S&P 500 higher, rising 4.4% as it recovered from earlier losses related to artificial intelligence technology.
Despite the overall positive trend in the market, Guess? Inc. saw its stock drop by 4.8% after the announcement that its chief financial officer would be stepping down. The apparel and accessories company has initiated a search for a new CFO while appointing an interim replacement. The S&P 500 closed the day up 54.00 points at 5,608.25, with the Dow gaining 236.77 points to 40,896.53, and the Nasdaq composite rising 245.05 points to 17,876.77. Trading was relatively calm in the bond market as investors awaited a speech by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium later in the week.
The Federal Reserve’s potential interest rate cuts have been a focus for investors as the economy tries to navigate the balance between inflation and growth. Concerns over interest rates being too high have been exacerbated by weak hiring reports, prompting expectations for rate cuts next month. However, recent strong reports on the U.S. economy, including inflation and retail sales, have boosted optimism. While the week may not have many economic reports scheduled, corporate earnings reports, particularly from retailers like Lowe’s, Ross Stores, Target, and TJX, are expected to provide market insights.
The earnings season has shown better-than-expected results, with S&P 500 companies on track to deliver nearly 11% growth in earnings per share compared to last year. However, worries persist about consumer spending and income disparities, with lower-income individuals facing pressure from high prices despite inflation slowing down. CEOs remain cautious in their commentary, waiting for greater macroeconomic and political clarity. In the bond market, the 10-year Treasury yield dipped slightly. Internationally, Japan’s Nikkei 225 dropped 1.8% due to the rise in the Japanese yen’s value against the U.S. dollar and concerns about exporters’ profits.
Overall, global stock markets were calmer, with European indexes seeing modest gains and Asian indexes mixed. The recent turmoil in markets, including the yen’s value swings following the Bank of Japan’s interest rate hike, has affected investor sentiments. However, movements have stabilized, and investors are shifting their focus towards upcoming events like Powell’s speech and corporate earnings announcements. Despite economic uncertainties, there is cautious optimism for a pickup in the markets when more clarity emerges.
