Traders work on the floor at the New York Stock Exchange on Sept. 9, 2024.
Brendan Mcdermid | Reuters
The S&P 500 rose Monday, as traders looked to build on the sharp gains seen last week following the Federal Reserve’s interest rate cut.
The broad market index added 0.1%, while the Nasdaq Composite hovered near the flatline. The Dow Jones Industrial Average gained 33 points, or 0.08%. The S&P 500 energy sector advanced more than 1%.
The moves come after a winning week on Wall Street that centered around the Federal Reserve’s decision to lower interest rates by 50 basis points, its first cut in four years. Despite some choppiness following the initial announcement, stocks rallied in the days following.
The Dow ended Friday at an all-time high close, which was notably above 42,000. All three of the major indexes added more than 1% for the week, during which the S&P 500 also reached new records.
Investors parsed fresh economic data on Monday, including a 15-month low reading for PMI manufacturing activity in the U.S. for August.
To be sure, stocks still will remain especially vigilant toward any economic data that could push back against hopes for a soft landing. Weekly jobless claims data on Thursday will give Wall Street further insight into the state of the economy and labor market.
“Investors have been working under the assumption that a softening in labour markets was driving Fed policy, and have placed a heavy emphasis on relatively-small changes in non-farm payrolls reports, but it is possible that this assumption is misplaced,” Karl Schamotta, chief market strategist at Corpay Cross-Border Solutions, wrote on Monday. “And if it is, the volatility roadmap could be redrawn.”
2-year Treasury yield could hint at how bond traders view Fed
With the Fed fund futures market still pricing in more aggressive rate cuts than the recent projections from the Federal Open Market Committee, many Wall Street pros are keeping an eye on the short-end of the yield curve.
Strategas technical strategist Chris Verrone said in a note to clients that whether the 2-year Treasury yield hits a new low could be an area to watch.
“The pre-FOMC low was 3.50% on 2s… anything lower over coming days / weeks makes us wonder if the bond market still isn’t satisfied with the Fed’s posture,” the note said.
The U.S. 2-year Treasury yield is trading just above 3.5%.
The 2-year yield was up slightly on Monday to 3.58%. Bond yields move opposite of price.
— Jesse Pound
Prepare for upcoming volatility, says UBS
Although equities have recently reached new highs, UBS warns that the final quarter of 2024 will not necessarily be smooth sailing.
“Market sentiment has also proven fragile, and investors will face a range of challenges in the final quarter of 2024,” Mark Haefele, global wealth management chief investment officer, wrote in a Monday note.
Haefele advises investors to manage their U.S. election risk and exposure, particularly within sectors such as renewable energy, consumer discretionary and currencies such as the yuan. With geopolitical conflicts also posing as potential headwinds to the market, diversification will be key for investors, he added.
“Investors lacking adequate exposure to AI can consider using bouts of market angst to seize the longer-term opportunity presented by this theme, which we expect to be a driver of markets in coming years. Those with high exposure can consider capital preservation strategies,” Haefele said.
— Hakyung Kim
Micron, Tesla among stocks making biggest midday moves
Micron offices in San Jose, California, on Nov. 30, 2023.
David Paul Morris | Bloomberg | Getty Images
Check out the companies making headlines in midday trading:
- Micron Technology — Micron edged 2.7% higher after JPMorgan reiterated the stock as overweight ahead of the memory chipmaker’s earnings, which are expected Wednesday after market close. Analyst Harlan Sur anticipates Micron’s results will be boosted by strong artificial intelligence and server demand.
- Tesla — Shares rose 4.8% after Barclays reiterated its equal weight rating on the electric vehicle maker, saying Tesla’s third-quarter delivery numbers could come in better than expected and be a “near-term positive” for the stock.
- AeroVironment — The defense contractor popped more than 8% after the U.S. Army lifted a stop work order on a $990 million contract. Monday’s gain put the stock on track for its biggest advance since Aug. 28, when it popped 9%.
For the full list, read here.
— Pia Singh
Deepwater’s Munster says market may be overlooking Intel’s ‘valuable’ infrastructure business
Investors may be overlooking Intel’s infrastructure business potential, according to Deepwater Asset Management’s Gene Munster.
“Setting aside Intel’s product decisions that they’ve made, they have great infrastructure that ultimately can be redirected to help build what will be, ultimately something that is bigger than the internet over the next decade,” he told CNBC’s “Squawk Box,” referring to artificial intelligence.
While the embattled chipmaker’s product difficulties warrant the recent stock performance, Munster views Intel’s fab business as a “valuable” asset for investors willing to look beyond the short run.
He called recent reports of a takeover or investment deal a “likely” outcome.
— Samantha Subin
Chicago Fed’s Goolsbee sees ‘many more rate cuts’ ahead
Chicago Federal Reserve President Austan Goolsbee said Monday that the Fed is in a position now where it should ease monetary policy aggressively as inflation progresses lower.
“As we’ve gained confidence that we are on the path back to 2%, it’s appropriate to increase our focus on the other side of the Fed’s mandate — to think about risks to employment, too, not just inflation,” Goolsbee said in remarks to the National Association of State Treasurers.
“And given the through line on economic conditions, that likely means many more rate cuts over the next year,” he said.
His comments follow the Fed’s decision last week to cut benchmark rates by half a percentage point. Goolsbee is a nonvoting member of the rate-setting Federal Open Market Committee this year but will vote in 2025.
— Jeff Cox
Manufacturing PMI reading hits lowest level since June 2023
Corning fiber-optic manufacturing facility in rural Midland, North Carolina.
Travis Dove | The Washington Post | Getty Images
Manufacturing activity in the U.S. hit its lowest level in 15 months during September, according to a Purchasing Managers’ Index survey Monday from S&P Global.
The manufacturing PMI came in at 47.0, representing the percentage of managers indicating expansion. That was down from 47.9 in August for the lowest reading since June 2023, and below the Dow Jones estimate for 48.4.
On the services side, the index was at 55.4, exactly as expected and up 0.2 points from August.
— Jeff Cox
S&P 500 opens higher
The S&P 500 edged higher on Monday as investors turn their attention to a fresh jobs report later this week.
The broad market index advanced 0.21%, while the Nasdaq Composite gained 0.31%. The Dow Jones Industrial Average hovered near the flatline.
— Brian Evans
Intel and Pinterest among the stocks making moves before the bell
Here are some stocks making big moves premarket:
- Intel — The chipmaker rose 4% on news that asset management company Apollo Global Management offered to make an equity-like investment of as much as $5 billion in Intel, according to a Bloomberg News report on Sunday. CNBC confirmed on Friday that Qualcomm had recently approached Intel about a takeover. Intel has lost more than half its value this year, and last reached an all-time high in the summer of 2000.
- Pinterest — The social media platform advanced more than 2% after Deutsche Bank initiated research coverage with a buy rating. The bank sees an increasing relevance of the platform among users and expects strong revenue growth over the next few years.
- Ciena — The networking software maker added more than 4% after a double upgrade by Citigroup to buy from sell, citing an improving landscape in the broader telecommunications/cable industry. The bank sees bookings growth heading into next year.
Read here for the full list.
— Sean Conlon
Fed’s Bostic says he backed half-point cut, sees more ahead
Atlanta Federal Reserve President Raphael Bostic.
David A. Grogan | CNBC
Atlanta Federal Reserve President Raphael Bostic said Monday that he supported last week’s half-percentage-point interest rate cut and believes policymakers can move more quickly than he had expected to loosen monetary policy.
“Progress on inflation and the cooling of the labor market have emerged much more quickly than I imagined at the beginning of the summer,” he said in remarks to the European Economics and Financial Centre. “In this moment, I envision normalizing monetary policy sooner than I thought would be appropriate even a few months ago.”
A voter this year on the rate-setting Federal Open Market Committee, Bostic added that the risks of the labor market weakening further are of as much concern as inflation, giving the Fed impetus to continue cutting.
“If the pandemic-era economy has taught us anything, it is to expect to be surprised. In my view, the 50-basis-point adjustment at the meeting last week positions us well should the risks to our mandates turn out to be less balanced than I am thinking,” he said.
— Jeff Cox
Intel rises on news of Apollo Global investment
The Intel logo is displayed on a smartphone screen.
Dominika Zarzycka | Nurphoto | Getty Images
Shares of chipmaker Intel added more than 4% in premarket trading on Monday following a Bloomberg report that Apollo Global offered to make a multibillion-dollar investment in the company.
Intel stock.
Apollo could be willing to invest as much as $5 billion, according to sources cited by Bloomberg.
— Brian Evans
Macro environment supportive for stocks, JPMorgan traders say
Traders at JPMorgan are optimistic on stocks.
“Our economic hypothesis has been that the US Consumer is in a position of significant strength, certainly there are some that are constrained by cumulative inflation, but overall spending remains robust,” they said. “There is a strong credit impulse in the market place with additional pent-up demand that can manifest itself in both stronger business formation, hiring, and housing demand.”
“In our view, this macro environment remains supportive of stocks and after this short-term volatility, we expect stocks to move higher,” the traders added.
— Fred Imbert
Stocks saw winning week
Stocks are coming off a positive week as the market celebrated the Federal Reserve’s interest rate cut.
The Dow led the way, climbing 1.6% and closing Friday at a record high. The S&P 500 added 1.4% for its fifth winning week of the last six. The Nasdaq Composite rose 1.5%.
— Alex Harring
Stock futures are near flat
Futures tied to the Dow, S&P 500 and Nasdaq 100 were all little changed shortly after 6 p.m. ET Sunday.
— Alex Harring
