The U.S. stock market experienced a significant rally on Monday, bringing Wall Street closer to its record heights after a tumultuous summer. The S&P 500 surged 1% to mark its eighth consecutive gain, the longest winning streak since November. This positive momentum follows the index’s best week of the year and has brought it back to within 1% of its all-time high, after a recent dip of nearly 10%.
The Dow Jones Industrial Average also saw gains, rising by 236 points or 0.6%, while the Nasdaq composite jumped by 1.4%. Advanced Micro Devices played a key role in driving the market forward by announcing its acquisition of ZT Systems, a supplier in the cloud computing and artificial intelligence industries, in a deal valued at $4.9 billion. This news led to a 4.5% increase in AMD’s stock price. Another chip company, Nvidia, also made significant gains, rising by 4.4% and recovering most of its losses from earlier in the summer.
However, Guess? Inc. experienced a setback with a 4.8% drop in its stock price after announcing the departure of its chief financial officer. The apparel and accessories company is now in search of a new CFO and has appointed an interim in the meantime.
Overall, the S&P 500 rose by 54.00 points to 5,608.25, the Dow gained 236.77 points to 40,896.53, and the Nasdaq composite jumped by 245.05 points to 17,876.77. Trading was relatively quiet in other markets, including the bond market, as investors awaited a speech by Federal Reserve Chair Jerome Powell scheduled for Friday at the Jackson Hole symposium in Wyoming.
The upcoming speech by Powell is highly anticipated, with expectations of a potential interest rate cut next month. The Fed’s previous rate hikes aimed to curb inflation without causing a recession, but recent economic indicators suggest a need for rate cuts to stimulate the economy. Concerns about the impact of high interest rates and overvaluation of tech stocks, such as Nvidia, have contributed to recent market volatility.
Despite recent challenges, positive economic reports and strong corporate earnings have bolstered optimism. With the majority of S&P 500 companies reporting better-than-expected profits, there is a sense of cautious optimism among CEOs. Retailers like Lowe’s, Ross Stores, Target, and TJX are among those expected to report earnings this week.
In the bond market, the yield on the 10-year Treasury dipped slightly to 3.87%. Internationally, Japan’s Nikkei 225 index dropped by 1.8% due to a strengthening yen, which can impact Japanese exporters‘ profits. However, other global markets remained relatively stable, with European indexes showing modest gains and Asian indexes mixed.
Overall, the U.S. stock market’s recent rally reflects a combination of positive economic indicators, corporate earnings, and anticipation of potential Fed actions. Investors are closely monitoring developments in the market and economic landscape as they navigate through the remaining weeks of summer.