Traders work on the floor at the New York Stock Exchange on Sept. 9, 2024.
The S&P 500 climbed to a fresh closing high on Monday as traders looked to build on last week's gains following the Federal Reserve's interest rate cut.
The broad market index added 0.28% to end at 5,718.57, while the Dow Jones Industrial Average gained 61.29 points, or 0.15%, to close at 42,124.65. Both indexes closed at records. The Nasdaq Composite ticked up 0.14% to 17,974.27.
The moves come after a winning week on Wall Street that centered around the Fed'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.
On Friday, the Dow closed at a record, 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.
Traders will be vigilant for any economic data that could dampen 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 labor 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, wrote Monday. "And if it is, the volatility roadmap could be redrawn."
Money Report
Stocks close higher
Stocks closed higher on Monday, with the S&P 500 reaching a fresh record-high close.
The broad market index gained 0.28% to close at 5,718.57. The Nasdaq Composite added 0.14% to 17,974.27, while the Dow Jones Industrial Average advanced about 61 points, or 0.15%, to finish the session at 42,124.65.
— Brian Evans
JPMorgan reiterates overweight rating on Micron Technology ahead of earnings
JPMorgan is standing by Micron Technology as the memory chipmaker readies for its earnings report this week.
Analyst Harlan Sur reiterated his overweight rating on the stock, saying the market may be overlooking a strong setup into 2025. However, he anticipates in-line guidance as the industry grapples with weaker commodity prices in the second half and lower consensus expectations.
"We believe the memory industry is still in the early stages of the up-cycle where out-year EPS estimates typically get revised higher by ~2-3x and memory stocks typically follow the positive EPS revision trajectory higher," Sur wrote, adding that he expects dynamic random-access memory, or DRAM, pricing improvements through the middle of 2026.
"The big difference versus prior up-cycles is that the new AI-driven demand pull from HBM DRAM is not only a new demand driver in the industry … but is the fastest growing new memory driver in the history of the memory market," he added.
Sur expects the bounce back in the memory industry to look similar to 2017 and 2018, which contributed to eight straight quarters of earnings per share upside. This could result in Micron reaching the $190 to $200 stock level.
The firm retained a $180 price target, implying shares could nearly double from Friday's close.
"Longer term, the company's increasing product and end-market diversification should reduce revenue/earnings volatility and also position the company to do well in markets (handset) that require multiple types of memory," Sur wrote.
— Samantha Subin
More near-term choppiness ahead, says UBS strategist
Equities will likely undergo near-term volatility with geopolitical tensions and the U.S. presidential election coming up this fall, according to Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. In particular, the market may be overly sensitive following the Federal Reserve's recent 50 basis point rate cut, he added.
Ahead of this volatility, Samana advises investors "to be a little careful with markets."
The markets "have a tendency to not only front run, but also to over-extrapolate. I think the Fed is probably more right than markets are, and that probably leads to some disappointment down the road," Samana told CNBC's "Squawk on the Street" on Monday.
— Hakyung Kim
S&P 500 rise to all-time highs in September has historically meant strong performance in fourth quarter
The S&P 500's rally to record levels this month bodes well for the final quarter of the year, data shows.
When the broad index has reached all-time highs in September, it has gone on to be positive in the fourth quarter about 90% of the time, according to historical data analyzed by Ryan Detrick, Carson Group's chief market strategist.
The S&P 500 has risen almost 5% on average in the fourth quarter of years with a September record, according to Detrick's analysis.
The outlook is even brighter when looking just at September all-time highs during election years.
The S&P 500 has a 100% positivity rate for the fourth quarter in these instances. On top of that, it sees an average gain of nearly 6% during the three-month period.
— Alex Harring
2-year Treasury yield could hint at how bond traders view Fed
With the Fed funds 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 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
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
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 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
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.
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
