Mega-cap tech shares lifted U.S. equities on Monday ahead of key economic data this week as traders are betting that a Federal Reserve interest rate cut will fuel further stock market gains.
The S&P 500 index rose nearly 0.2% at 2:19 p.m. in New York and is on pace for a record close as tech names including Nvidia Corp., Broadcom Inc. and Amazon.com Inc. helped lift the gauge even as more stocks in the index declined than rose. The equal-weight version of the S&P 500 declined.
“Market internals are weaker than they seem,” Vital Knowledge founder Adam Crisafulli wrote in a Monday note. Meanwhile, the tech-heavy Nasdaq 100 rose 0.6%, while the Dow Jones Industrial Average moved 0.1% higher.
Notable gainers included EchoStar Corp., rising sharply after Elon Musk’s SpaceX agreed to buy wireless spectrum from the company in a $17 billion deal.
Monday’s move higher came as traders increased wagers on an interest rate cut at the US central bank’s meeting next week, which may lift US stocks in September, historically the worst month of the year for equity markets.
“Aggressive rate cuts are coming,” said Dennis DeBusschere, president and chief market strategist at 22V Research LLC. “Assuming economic activity data holds up, which it is for now, that should be a support for markets,” he wrote in a Monday note.
Strategists at Goldman Sachs and Morgan Stanley see potential rate cuts driving more stock gains. David Kostin, chief U.S. equity strategist at Goldman Sachs, anticipates the S&P 500 Index to rise 2% by the end of the year and 6% by the middle of 2026, while Morgan Stanley’s Michael Wilson expects cuts to spur the next leg of the bull market, lifting small-caps.
The Russell 2000, a gauge of US small- and mid-cap stocks, has underperformed the S&P 500 so far this year. Small cap stocks in the U.S. have been “underappreciated” in recent months, Manulife John Hancock Investment Co-Chief Investment Strategists Emily Roland and Matt Miskin said Monday.
Also on Monday, the New York Fed is set to publish one-year inflation expectations at 11 a.m., while consumer credit for July is due at 3 p.m. in New York.
Economic data scheduled to be released this week include a producer prices report on Wednesday, consumer prices on Thursday and a University of Michigan sentiment survey on Friday.
“This current bull market feels unstoppable with new support forming as former tent poles weaken,” JPMorgan strategists wrote in a Monday note, noting that Broadcom Inc.’s recent earnings beat has helped the AI investing theme. Even a “hawkish surprise” in a key inflation report this week “is unlikely to stop the Fed from cutting” next week,” the bank’s analysts wrote.
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