Megacaps Boosted by Treasury Yield Pullback
Apple, Microsoft, Alphabet, and Tesla observed increases between 0.5% and 1.3% as the 10-year U.S. Treasury note yield dropped to 4.20%. The S&P 500's communication services and technology sectors led the gains among the 11 major S&P sub-indexes, rising by 1.2% and 0.8%, respectively.
Volatility Ends Higher after Jackson Hole Meeting
Stocks ended higher after a volatile session on Friday when Federal Reserve Chair Jerome Powell indicated at the Jackson Hole meeting that the U.S. central bank might need to increase interest rates further. The focus now shifts to the personal consumption expenditures price index, the Fed's preferred inflation measure, and the non-farm payrolls data due later this week.
Market Reaction and Expectations
Peter Andersen, founder of Andersen Capital Management, noted that investors were seeking more guidance or hints about the Fed's next move, but no new thoughts or strategies were disclosed. He added that the market might start slightly positive but remain in a holding pattern until investors can digest the key data releases this week.
Surprising Strength in the U.S. Economy
The forthcoming data releases coincide with a period when unexpected strength in the U.S. economy has raised expectations that interest rates will remain higher for a more extended period. Traders' expectations for a pause in tightening by the Fed remained unchanged for the September meeting, while bets on a 25-basis point interest rate hike in November increased to nearly 50% from 38% a week earlier, according to the CME Group's FedWatch tool.
China Cuts Stamp Duty to Revive Market
China reduced the stamp duty on stock trading by half on Monday to bolster its struggling market, resulting in a 1.0% to 2.8% increase in U.S.-listed shares of Chinese companies, including PDD Holdings, JD.com, Baidu, and Alibaba. U.S. Commerce Secretary Gina Raimondo raised concerns about several U.S. business issues, including Intel and Micron, with Chinese Commerce Minister Wang Wentao. As a result, Micron and Intel's shares gained 3.4% and 1.2%, respectively.
Dow Jones, S&P 500, and Nasdaq Composite Performance
At 9:36 a.m. ET, the Dow Jones Industrial Average was up by 262.87 points (0.77%) at 34,609.77, the S&P 500 increased by 30.97 points (0.70%) to 4,436.68, and the Nasdaq Composite rose by 124.67 points (0.92%) to 13,715.31.
Significant Stock Movements
3M's stock jumped 6.4% following a report that the conglomerate had tentatively agreed to pay over $5.5 billion to settle over 300,000 lawsuits alleging it sold defective combat earplugs to the U.S. military. Chinese EV maker Xpeng's U.S.-listed shares gained 2.3% after the company announced it would acquire Didi's electric car development business in a deal worth up to $744 million. The U.S. Federal Trade Commission suspended its challenge to Amgen's $27.8 billion acquisition of Horizon Therapeutics, causing Horizon's shares to rise by 5.8%.
The number of advancing issues outnumbered decliners by a 5.47-to-1 ratio on the NYSE and a 2.95-to-1 ratio on the Nasdaq. The S&P index recorded one new 52-week high and no new lows, while the Nasdaq recorded 19 new highs and 40 new lows.