US stock indexes achieved new record highs on Monday, marking a continued upward trend in a relatively subdued trading environment.
The S&P 500 gained 16.02 points, or 0.3%, closing at 5,718.57, surpassing its previous record set on Thursday. The Dow Jones Industrial Average rose 61.29 points, or 0.1%, to close at 42,124.65, also eclipsing its all-time high from Friday. Meanwhile, the Nasdaq Composite added 25.95 points, or 0.1%, finishing at 17,974.27.
Tesla led the gains among major stocks, climbing 4.9% and recovering from significant losses earlier in the year when its stock had dropped as much as 42% in April. This rise helped counterbalance a notable decline in Trump Media & Technology Group, which fell 10.3%, reaching its lowest point since going public in March. The company has faced scrutiny amid speculation about potential insider stock sales now that the “lock-up” period has ended, although former President Donald Trump has indicated he does not plan to sell.
The recent rally in financial markets follows a significant interest rate cut by the Federal Reserve last week, the first of its kind in over four years. The central bank’s decision is seen as a move to bolster the US economy by reducing borrowing costs for consumers and businesses, with hopes of avoiding a recession. However, some analysts express concerns that the Fed’s actions may come too late, especially as signs of a slowing job market emerge.
A preliminary report from S&P Global indicated that US business activity is not growing as robustly as anticipated, primarily due to ongoing challenges in the manufacturing sector. The report noted that manufacturing contracted more sharply in September, hitting a 15-month low, a trend attributed to the impact of elevated interest rates.
Despite these challenges, Chris Williamson, chief business economist at S&P Global Market Intelligence, characterized the overall economy as still growing at a healthy rate. However, he cautioned that reliance on the service sector for growth and declining business confidence could pose risks.
Looking ahead, several economic reports scheduled for release later this week may provide further insight into the state of the US economy. Key reports include a final revision of economic growth for the spring and consumer spending data, both of which are crucial as Wall Street navigates concerns about potential job market slowdowns.
In the bond market, the yield on the 10-year Treasury held steady at 3.74%, while the yield on the two-year Treasury edged down to 3.58%. Internationally, European stock indexes showed modest gains following weaker-than-expected business activity data in the eurozone, with Germany’s DAX rising 0.7% and France’s CAC 40 increasing by 0.1%. In Asia, markets exhibited mixed results, with a 0.4% rise in Shanghai contrasted by a 0.1% decline in Hong Kong.
The Dow and S&P 500’s record closings reflect a broader trend in the markets following the Fed’s rate cut, which has historically boosted investor confidence. Fed officials have signaled support for further rate reductions throughout the year, leading to speculation about future monetary policy moves.
As traders await key economic data, analysts emphasize the importance of maintaining a cautious approach. Sam Stovall, chief investment strategist at CFRA Research, noted that investors are adopting a “wait-and-see” attitude regarding the possibility of a soft landing for the economy.
With input from the Associated Press, Reuters, and New York Post.
