US equity indexes experienced a notable surge after midday on Monday, driven primarily by strong performances in the financials and industrials sectors. This rally played a crucial role in reversing the declines observed in the previous week. The Nasdaq Composite Index rose by 1.1%, reaching a level of 16,877.6, while the S&P 500 index showed an increase of 1.2%, closing at 5,472.2.
Additionally, the Dow Jones Industrial Average climbed 1.3%, finishing the day at 40,853.5. Intraday data indicated that all sectors contributed to the upward momentum, with financials emerging as one of the foremost gainers. Last week, all three major indexes concluded trading in the red as investors assessed the potential magnitude of the interest-rate reduction anticipated on September 18, when the Federal Open Market Committee (FOMC) will announce its policy decisions.
Market experts indicated that if macroeconomic conditions deteriorate further, the Federal Reserve may opt for a 50 basis point cut, signaling significant economic sluggishness ahead. In terms of economic indicators released on Monday, wholesale inventories recorded a modest rise of 0.2% for July, but this figure was revised down from the initial 0.3% increase reported in the advance reading, as well as marking a flat print in June.
Analysts from a Bloomberg survey had predicted that July's inventory numbers would remain unchanged. As of Monday afternoon, the market was pricing in a 73% probability of a 25 basis-point interest rate cut next week, according to the CME Group’s FedWatch Tool. The remaining 27% indicated a possibility of a more substantial 50 basis-point drop.
Morgan Stanley articulated in a note that they continue to anticipate a broad deceleration as the year leads to its conclusion, albeit without falling into recession territory. The CBOE's Volatility Index (VIX), often referred to as the fear index, dropped by 13% during intraday trading, settling at 19.36, reflecting a decrease in market anxiety. In the bond market, Treasury yields showed a mixed performance.
The yield on the 10-year Treasury slipped by 1.5 basis points, landing at 3.69%. Conversely, the two-year yield increased by 1.3 basis points, reaching 3.66%, after having traded lower earlier in the session. In the corporate sphere, Boeing ($BA) saw its shares jump by 3.6% during intraday trading, making it the leading gainer among the Dow constituents.
This spike followed the announcement that the aerospace manufacturer reached a tentative labor agreement with the International Association of Machinists and Aerospace Workers, a union representing over 33,000 employees. Moderna ($MRNA) announced on Monday that it had secured a Drug Establishment License from Health Canada for its production facility located in Laval, Quebec.
This news propelled its shares, which surged by 6.1%, making it one of the top performers on both the S&P 500 and the Nasdaq index. Apple ($AAPL) was reported to have integrated Arm Holdings’ ($ARM) V9 chip design into the A18 chip of its newly anticipated iPhone 16, with the Financial Times suggesting that the launch of the smartphone would likely take place on Monday.
Arm Holdings’ stock surged by 7.4% during intraday trading, facilitating its status as one of the leading assets on the Nasdaq. In commodity trading, West Texas Intermediate crude oil experienced a jump of 1.5%, reaching a price of $68.68 per barrel, rebounding from this year’s low point. Analysts at PVM Oil Associates remarked, "There is no point in trying to get away from the fact that last week's oil performance was anything less than terrible ...
a small recovery in prices is underway this morning, inspired by hurricane warnings that might threaten the US Gulf Coast, but the wider conversation remains on where demand will come from and what OPEC+ can do." Gold values rose by 0.4%, reaching $2,533.50 per ounce, while silver prices increased by 1.6%, settling at $28.64 per ounce..