Stock market today: Dow jumps 200 points to record high as investors assess path of Fed rate cuts
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- US stocks started the week with a record high as investors assessed the path of interest rates.
- Fed Chairman Powell hinted at imminent rate cuts, but the depth of cuts remains uncertain.
- Upcoming inflation and jobs data will influence the Fed's policy decisions.
US stocks traded mostly higher on Monday, with the Dow jumping 200 points to a record high as investors assess the potential path of future interest rate cuts from the Federal Reserve.
Fed Chairman Jerome Powell indicated that interest rate cuts were imminent in his speech at Jackson Hole on Friday, uncertainty remains as to how aggressive the Fed will be in cutting rates.
While the CME FedWatch Tool sees a 100% chance of a Fed rate cut in September, there's a 65% chance of a 25 basis point rate cut and a 35% chance of a 50 basis point rate cut.
"Fed Funds Futures are discounting a steady diet of rate cuts over the next 12 – 16 months that eventually end with policy rates equal to the neutral rate. That is consistent with further economic growth, not recession," DataTrek Research co-founder Nicholas Colas said in a note on Monday.
The future path of inflation and the resilience of the labor market will determine the path and intensity of interest rate cuts.
Investors will get their next inflation reading on Friday with the release of the PCE Index, which is considered the Fed's most preferred inflation gauge.
For the current state of the jobs market, investors will pay attention to the weekly release of initial jobless claims on Thursday, followed by the August jobs report next week.
Aside from the Fed, investors are paying close attention to the tail-end of second-quarter earnings, with Nvidia and Salesforce set to report earnings on Wednesday after the market close.
Here's where US indexes stood at 10:14 a.m. on Monday:
- S&P 500: 5,634.55, unchanged
- Dow Jones Industrial Average: 41,380.10, up 0.5% (+205.03 points)
- Nasdaq composite: 17,784, down 0.52%
Here's what else is going on today:
- Meet the 'silver squatters' who are woefully unprepared for retirement.
- Kamala Harris needs to align two key parts of her housing plan if she wants to fix the affordability crisis.
- Here's what economists are saying about Kamala Harris' plan to clamp down on food inflation.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil increased 3.62% to $77.54 a barrel. Brent crude, the international benchmark, jumped 3.18% to $81.53 a barrel.
- Gold was higher by 0.02% to $2,546.70 an ounce.
- The 10-year Treasury yield was flat at 3.808%.
- Bitcoin dropped 1.11% to $63,554.