NEW YORK: The S&P 500 and the Nasdaq indexes rose on Monday, rebounding from last week’s declines, as investors shrugged off fears of a looming government shutdown and hawkish remarks from a Federal Reserve official.
The surge underscores a strong risk-on sentiment among investors, whose expectations of a dovish Fed have helped equities sustain lofty valuations, even amid persistent inflation concerns and labor market uncertainties. “Dip buyers keep being rewarded in this market. One day they won’t, but until proven otherwise you need to be buying dips,” said Matthew Tuttle, CEO of Tuttle Capital Management.
At 11:52 a.m. ET, the Dow Jones Industrial Average fell 92.77 points, or 0.2 percent, to 46,154.52. The S&P 500 gained 11.59 points, or 0.17 percent, to 6,655.29, while the Nasdaq Composite rose 104.87 points, or 0.47 percent, to 22,588.94.
Attention is now riveted on a standoff between Republicans and Democrats over funding that has raised the prospect of a shutdown beginning Wednesday, the first day of the US government’s 2026 fiscal year.
“Financial markets have generally shrugged off government shutdowns. However, prior shutdowns are not fully analogous to the potential shutdown this week,” Goldman Sachs economists said in a note.
A potential shutdown would stall the release of key economic data, including Friday’s nonfarm payrolls report, and cloud the outlook for markets. Investors are also monitoring commentary from several Fed policymakers for any signs of concern over the potential loss of economic visibility should a shutdown materialize.
Cleveland Fed President Beth Hammack, among the most hawkish Fed officials and not a voter on policy this year, said on Monday the central bank needed to maintain restrictive monetary policy to cool inflation. Traders, however, are pricing in a 91.4 percent chance of a 25-basis-point rate cut at the next Fed meeting.
The S&P 500 technology sector gained about 0.5 percent. Nvidia rose 2.1 percent, while Micron Technology added 4.1 percent. Lam Research advanced 2.4 percent, after Deutsche Bank upgraded the rating on the chip-making equipment firm to “buy” from “hold”.
The stocks catapulted the broader semiconductor index to a record high, as well as boosted the Nasdaq.
AppLovin set a new record and was last up 5.8 percent. Morgan Stanley raised the target price on the stock to USD750 from USD480.
Losses in stocks such as Chevron, down 2.4 percent, and McDonald’s, down 1 percent, weighed on the Dow.
The S&P 500 has gone 103 trading days without falling below its 50-day average, an unusually long streak that shows how strong the market has been, BTIG said, noting that the index may be due for a pullback.
Comments
Comments are closed for this article.