Wall Street Extends Record-Breaking Momentum
U.S. equities climbed toward more all-time highs on Monday as investors prepared for a week packed with potentially market-moving events. The S&P 500 rose about 1%, the Dow Jones Industrial Average gained roughly 0.5% to around 1,550 points, and the Nasdaq composite climbed 1.7% as major benchmarks push further into record territory. The rally mirrors strength seen in Asia and comes as traders eye the week’s events that could shape the trajectory of the global stock market.
Markets have benefited from a confluence of factors, including expectations for continued interest-rate cuts by the Federal Reserve to bolster a slowing job market, and the prospect of easing trade tensions between the United States and China. A calmer tone in U.S.-China discussions would be a boon for growth, easing nerves around the world’s two largest economies and supporting valuations across tech and consumer sectors.
What Fed Watchers Are Watching
Investors anticipate the Fed’s next move on interest rates, due on Wednesday. The prevailing view remains that the central bank will trim the federal funds rate by a quarter-point at a second consecutive meeting. Yet the Fed has warned that it could pivot if inflation accelerates beyond its current trajectory, which could temper the pace of future cuts. The latest inflation data offered a modest boost to optimism, but ongoing government funding questions could complicate the outlook for policy easing in the months ahead.
Earnings, AI, and the Run-Up to Major Reports
Beyond policy, earnings season looms large. Several heavyweight names report this week, including Alphabet, Meta Platforms and Microsoft on Wednesday, followed by Amazon and Apple on Thursday. These results will be scrutinized for signs that AI-driven investments are translating into durable profit growth and whether companies can sustain momentum amid higher capital costs and evolving consumer demand.
Several corporate moves helped lift sentiment Monday. Keurig Dr Pepper rose about 6.9% after reporting quarterly earnings that matched expectations, with price increases on K-Cup products contributing to the results. In mergers and acquisitions, Cadence Bank rose after Huntington Bancshares announced a $7.4 billion stock deal, while Avdinity Biosciences surged on news of a $12 billion buyout by Novartis, underscoring investors’ appetite for strategic transactions amid a robust market backdrop.
Analysts note that the AI narrative remains a double-edged sword: it sustains lofty valuations for some of the sector’s leaders, even as concerns about a bubble-like surge influence risk management. Traders will be watching earnings guidance and the pace of technology spending to judge whether the AI wave can sustain the rally into a peak earnings season.
Global Markets: A Broad, Risk-On Tilt
International markets reflected a similar risk-on mood, with gains across Asia and Europe. Shanghai and Hong Kong advanced, while Tokyo’s Nikkei 225 surpassed the 50,000 mark amid optimism around government policy and defense-related spending. South Korea’s Kospi also rose, supported by interest from investors in domestic equities tied to growth sectors and export demand.
In fixed income, the yield on the 10-year U.S. Treasury edged down slightly, signaling continued demand for safety amid a week charged with data releases and policy signals. A softer-than-expected move in inflation data can provide more room for rate cuts, though investors remain biased toward a cautious stance should inflation surprise on the upside.
Gold Sinks as Markets Rally
Gold prices pulled back as equities strengthened, with bullion retreating from the high-water mark reached last week. The retreat reflects a shift in portfolios toward higher-yielding assets and a belief that the strongest drivers of the current rally remain growth prospects and policy accommodations rather than a safe-haven bid. While gold remains well above levels seen earlier in the year, the pullback could continue if risk appetite persists and economic data stay supportive of earnings growth.
Overall, the market’s trajectory this week will hinge on policy clarity, trade negotiations, and the ability of corporate earnings to justify the lofty valuations that have helped carry stocks to multiple record closes so far this year. If the U.S. and China can chart a constructive path and the Fed maintains its rate-cut trajectory with inflation in check, a continued rally toward new records could be on the cards for investors.
— AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
