U.S. stocks climbed Monday to begin a holiday-shortened week, with the S&P 500 exiting a market correction, as investors remained cheered by expectations that the Federal Reserve has finished raising rates.
- The Dow Jones Industrial Average DJIA rose 203.76 points, or 0.6%, to finish at 35,151.04, its highest close since Aug. 14 and just 0.9% below its 2023 closing high of 4,588.96 set on July 31.
- The S&P 500 SPX ended 33.36 points higher, up 0.7%, at 4,547.38, its highest finish since Aug. 1.
- The Nasdaq Composite COMP gained 159.05 points, or 1.1%, to close at 14,284.53, its highest since July 31.
U.S. markets will be closed Thursday for the Thanksgiving Day holiday. Stock and bond markets will close early on Friday.
What’s driving markets
The S&P 500 had been in a correction since Oct. 27, but closed above the 4,529.11 threshold that marked an exit, according to widely used criteria.
Stocks surged last week, with support tied to a subdued inflation reading that saw investors bet the Federal Reserve is finished raising rates.
“With a cooling economy easing concerns about another rate hike, expectations are now, right or wrong, focused on when the Fed may pivot to cuts,” said Chris Larkin, managing director for trading and investing at E-Trade at Morgan Stanley.
The November rally has come as borrowing costs tumble, with the yield on 10-year Treasurys BX:TMUBMUSD10Y, which last month traded above 5%, sitting below 4.5%.
The slide in yields, which move opposite to price, is driven by hopes that signs of slower economic activity and easing inflation means the Fed can start cutting interest rates by the middle of next year.
Richmond Fed President Tom Barkin said on Monday that he sees inflation being “stubborn,” and that future rate moves by the central bank will hinge on its direction, in a Fox Business interview.
The earnings highlight of the week is likely to come from artificial-intelligence chip maker Nvidia Corp.
Among the so-called Magnificent Seven megacap tech stocks, Microsoft Corp.
The Conference Board said its leading economic index declined 0.8% in October and fell for the 19th month in a row, though the U.S. economy doesn’t appear any closer to a recession than when the losing streak began. Economists polled by the Wall Street Journal had forecast a 0.7% drop in the leading index, a gauge of 10 indicators designed to show whether the economy is getting better or worse.
“The bias is for markets to rise this week…given the favorable seasonals, the rising confidence of falling inflation and general investor skepticism,” said Tom Lee, head of research at Fundstrat.
“Recall, that with holiday weeks like this, many institutional investors are away from their desks, so this could amplify market moves,” Lee added.
Companies in focus
Shares of Bristol-Myers Squibb Co.
+0.30%and 2seventy bio Inc. TSVT, +16.98%fell after the companies said the U.S. Food and Drug Administration would miss its target date for potential approval of earlier use of a cancer therapy.
Uber Technologies Inc.
+1.18%said Monday it is planning to offer $1.2 billion of five-year convertible bonds. Shares rose 0.6%.
-0.44%said Monday it has agreed to acquire Carlyle Group’s CG, +1.76%minority stake in the partnership that operates and manages its business in mainland China, Hong Kong and Macau.?Shares of McDonald’s and Carlyle Group each rose 1.2%.
— Jamie Chisholm contributed reporting