Key points:

  • Statements from Federal Reserve officials supporting rate cuts lifted positive market sentiment.
  • Investors eagerly await personal consumption expenditure data, which could impact the Fed’s future policy decisions.
  • Intel’s stock rise is linked to potential investment from Apollo.

The U.S. stock market closed Monday with modest gains. Investors are cautiously assessing the market’s future prospects following the recent Federal Reserve decision to cut interest rates.

The Dow Jones, S&P 500, and Nasdaq Composite indices posted moderate gains, closing at 42,124.65, 5,718.57, and 17,974.27 points, respectively.

Fed officials supported rate cuts

The positive market dynamic was driven by several factors, including comments from Federal Reserve representatives and stable industrial activity data. Last week, markets saw significant growth after the Fed’s decision to lower interest rates, marking the beginning of a new cycle of monetary easing.

On Monday, investors’ main focus was on speeches from three regional Federal Reserve Bank presidents. Market participants were looking for additional signals regarding the reasons for the significant 50 basis point rate cut. Remarks from Raphael Bostic, Neel Kashkari, and Austan Goolsbee, in support of the Fed’s latest decision and hints of further easing throughout the year, bolstered optimistic sentiment.

According to CME Group data, traders initially expected a more substantial rate cut at the Fed’s next meeting in November, especially after Governor Christopher Waller’s statement about the possibility of inflation slowing below the 2% target. However, market sentiment later shifted, and the likelihood of various rate cut scenarios now appears to be evenly balanced. According to LSEG estimates, markets generally expect a 74 basis point rate cut by the end of the year.

In terms of macroeconomic data, business activity in the U.S. remained stable in September, while the pace of price growth for goods and services reached its highest level in six months. This could indicate a potential strengthening of inflationary pressures in the near future.

Tesla shares jumped significantly

At the close of the trading session, most sectors of the S&P 500 index showed positive dynamics. Eight out of eleven sectors saw growth, with the energy sector standing out the most, rising by 1.31%. Meanwhile, stocks in the healthcare sector fell by 0.25%.

Interest rate-sensitive stocks showed mixed performance. Tesla shares surged by 4.65%, and Meta Platforms shares rose by 0.6% following positive analyst evaluations from Citigroup. The Russell 2000 index, which tracks the performance of small-cap companies, ended the session down 0.25%.

Investor attention is focused on August personal consumption expenditure data, which will be released on Friday. This metric, one of the key indicators of inflation, traditionally attracts close attention from the Federal Reserve. Analysts expect this data to have the most significant impact on market dynamics for the rest of the week.

Apollo may invest in Intel

One of the most notable events of the day was the 3.05% rise in Intel shares. American investment firm Apollo Global Management is considering making significant investments in Intel. According to reports, Apollo is prepared to invest several billion dollars in the chipmaker’s equity. This proposal comes amid Intel’s declining market value, with the company having lost nearly 60% of its value this year.

Intel’s management is currently evaluating Apollo’s offer. According to Bloomberg, the talks are at an early stage, and the outcome is still uncertain. It is noted that the investment amount could be adjusted, and the deal may not go through at all.