Dow rallies more than 550 points on Monday, recovering chunk of ...
Traders works on the floor at the New York Stock Exchange on July 3, 2024.
Brendan Mcdermid | Reuters
U.S. stocks jumped on Monday after investors bought the dip following Wall Street's worst week of the year, betting that a likely Federal Reserve rate cut later this month would bolster a slowing economy. Technology shares, among the hardest hit stocks last week, were Monday's top performers.
The Dow Jones Industrial Average traded 592 points higher, or about 1.5%, after losing more than 1,200 points last week. The S&P 500 gained nearly 1.4% after losing more than 4% in the prior week for its worst week since March 2024. It was the benchmark's first gain in five days.
The Nasdaq Composite jumped 1.3% following its worst week in more than 2 years, paced by a 3% jump in Nvidia. The AI darling lost 14% last week.
Outside of tech, retailers, banks and industrial shares also mounted a comeback as investors believe a rate cut would give a boost to the flagging consumer. JPMorgan Chase, Costco, Amazon and Boeing were among the winners on Monday.
S&P 500, 1 month
"I do think you have a little short-term bounce here — we were a little bit oversold last week. However, the markets are very focused on how the economy is going to be now, rather than what inflation is going to do and what the economy is going to do," said Sarat Sethi, managing partner at DCLA. "When the uncertainty starts building ... first thing you do is take some money off, especially since you've had such a good run this year."
Investors are awaiting two key inflation reports that could further inform the Fed's rate decision on Sept. 18. August's consumer and producer price reports are slated for release on Wednesday and Thursday morning, respectively. Traders see it as a certainty the Fed will cut by at least a quarter point.
Monday's rally comes after the stock market suffered serious losses to kick off its first trading week of September, which is historically a tough month for equities. These declines came as the August jobs report stoked fears of a slowing labor market. The S&P 500 averages a 0.7% decline in September, the worst track record of any month, according to the Stock Trader's Almanac.
Palantir and Dell Technologies popped 13.5% and 4.8%, respectively, after S&P Dow Jones Indices said late Friday the stocks will join the S&P 500.
Omar Marques | Lightrocket | Getty Images
Here are the stocks on the move midday:
Palantir Technologies, Dell Technologies — Palantir and Dell jumped 13% and nearly 5%, respectively, following the announcement after the bell Friday that both stocks would join the S&P 500 before the open on Sept. 23. Palantir is set to take American Airlines' spot, while Dell is going to replace Etsy.
Summit Therapeutics – The biotech stock surged about 65% after the company announced that its lung cancer drug candidate outperformed Merck's Keytruda in phase three clinical trial. Merck shares dipped 1.5% following the news.
JetBlue Airways – The airline stock popped 8% after Bank of America's analyst Andrew Didora upgraded the firm to neutral from underperform. Didora said JetBlue's "self-help initiatives," like revenue improvement strategies, are beginning to show early signs of impact. The analyst doubled his price target to $6, which would represent a 13% upside from Friday's close. JetBlue last week hiked its third-quarter revenue estimates.
Read the full list here.
— Sean Conlon
Every sector in the S&P 500 traded higher on Monday, underscoring the breadth behind the market's rally.
The broad index as a whole climbed 1.2% in afternoon trading. All 11 of the sectors, and more than 450 of the individual members, headed for gains.
Financials, consumer discretionary and industrials led the way, with the three sectors each climbing around 1.8%. On the other hand, communication services saw the most modest gain of the 11 sectors, rising just 0.3%.
S&P 500, 1-day
— Alex Harring
Small-cap and large-cap stocks have jockeyed back and forth for leadership during the third quarter. But while small caps are seen as more economically sensitive, an outperformance by smaller stocks may not be a good sign for the macro picture, according to RBC Capital Markets.
"In prior cycles, small caps would often start to outperform large caps around the time when unemployment started to rise, as they tended to bake in a challenging economy ahead of time. Since small caps tend to bake in recessions early, and underperform late cycle, the time to buy small caps has typically been in the middle of a recession," Lori Calvasina, the firm's head of global equity strategy research, said in a note to clients.
The small-cap Russell 2000 is up about 2.9% in the third quarter, while the is little changed.
— Jesse Pound
Both President Joe Biden and former President Donald Trump are reportedly eyeing to set up a sovereign wealth fund, an investment vehicle owned by the U.S. government.
Jaret Seiberg, financial services and housing policy analyst at TD Cowen, believes such an investment fund would be a political headache for the administration in charge.
"We do not expect Congress to establish a broad U.S. Sovereign Wealth Fund similar to Saudi Arabia given concerns from both parties that the investments will be politically motivated rather than designed to maximize returns for taxpayers," Seiberg said in a note to clients.
— Yun Li
If the Federal Reserve cuts interest rates this month, Best Buy will be a beneficiary, according to Loop Capital.
"We are incrementally more bullish on near-term demand given the beginning of the US Federal Reserve's rate cut campaign next week, which we believe will benefit Best Buy through better housing turnover and higher consumer confidence," analyst Anthony Chukumba wrote in a Monday note to clients.
The firm also reiterated its buy rating on the stock due to the retailer's competitive pricing.
"While Best Buy's price gap with Amazon widened slightly from our last pricing study, we note Best Buy remains at virtual price parity in televisions, home theater, and accessories," he also wrote.
Shares of Best Buy have surged nearly 26% this year.
Best Buy, 1-day
— Sean Conlon
A man walks past Deutsche Bank offices.
Luke MacGregor | Reuters
Deutsche Bank strategist Henry Allen wrote Monday that markets risk overexaggerating "how bad things are" and instead makes the case that economic conditions are from uniformly bleak.
The sell-off in stocks "has been driven by a narrow group, and we already knew that September is a seasonally weak month for equities," Allen wrote in a report entitled "Why are markets so nervous right now, and is this justified?"
But on the bright side, he noted, "jobless claims have been falling over the last month, payrolls growth remains positive, and financial conditions are still accommodative by historic standards. Moreover, given the weak track record of leading indicators in this cycle, it's hard to put too much faith in them."
What's more, while speculation has mounted that the Federal Reserve might deliver a half-point reduction at the conclusion of its two-day policy meeting on Sept. 18, "Globally, other central banks have only delivered 25bp moves for the most part, so there doesn't appear to be widespread alarm at the current state of the economy," Allen wrote. "The fact that others like the ECB have only moved in 25bp increments suggests they are not viewing this as a situation that requires a rapid readjustment for now," he said, referring to the European Central Bank.
— Scott Schnipper
European stocks opened higher on Monday, shrugging off more negative sentiment on Wall Street and in Asia-Pacific markets.
The pan-European Stoxx 600 index opened 0.47% higher, with all sectors and major bourses trading in the green. Tech led gains, up 1.43%, while travel and leisure stocks were 1.18% higher.
Stoxx 600.
— Karen Gilchrist
A sign is posted in front of Oracle headquarters in Redwood Shores, California, on March 11, 2024.
Justin Sullivan | Getty Images
Earnings for this upcoming week will be sparse, with just three companies in the S&P 500 set to report. Here are the major reports to look forward to:
Oracle (after Monday's closing bell)Petco (after Tuesday's closing bell)Dave & Buster's (after Tuesday's closing bell)GameStop (after Tuesday's closing bell)Kroger (before Thursday's opening bell)Adobe (after Thursday's closing bell)— Lisa Kailai Han, Robert Hum
