U.S. Stocks Finish Light Trading Day Moderately Higher

Stocks turned in a relatively lackluster performance during trading on Monday but managed to end the day moderately higher. With the upward move, the major averages once again finished the session at their best closing level in well over two years.

The major averages closed just off their highs of the session. The Dow climbed 157.06 points or 0.4 percent to 36,404.93, the Nasdaq edged up 28.51 points or 0.2 percent to 14,432.49 and the S&P 500 rose 18.07 points or 0.4 percent to 4,622.44.

Overall trading activity was somewhat subdued ahead of the Federal Reserve’s monetary policy announcement on Wednesday, although stocks continued to benefit from the optimism about the outlook for interest rates.

With the Fed widely expected to leave interest rates unchanged, traders are likely to focus more closely on the central bank’s accompanying statement and projections.

Reports on consumer and producer price inflation are also likely to attract attention in the coming days along with reports on retail sales and industrial production.

Optimism the Fed could pivot to cutting interest rates as soon as March 2024 has contributed to recent strength on Wall Street, although last Friday’s strong than expected jobs data has led to speculation the Fed could wait until May to begin lowering rates.

“Markets are very bullish in pricing in four interest rate cuts next year, the first likely coming in May, something the FOMC is unlikely to line up behind,” said Craig Erlam, OANDA Senior Market Analyst, UK & EMEA.

He added, “The question is how much of a change we’ll see from the September projections and to what extent the committee will push back against the markets.”

Among individual stocks, chares of Macy’s (M) moved sharply higher following reports an investor group consisting of Arkhouse Management and Brigade Capital has offered to acquire the department store chain for $5.8 billion.

Health insurer Cigna (CI) also surged after reportedly abandoning efforts to acquire rival Humana (HUM) and announcing a $10 billion increase in its share repurchase authorization.

Sector News

Semiconductor stocks moved sharply higher on the day, driving the Philadelphia Semiconductor Index up by 3.4 percent to its best closing level in almost two years.

Considerable strength was also visible among networking stocks, as reflected by the 2.5 percent gain posted by the NYSE Arca Networking Index.

Transportation stocks also showed a strong move to the upside over the course of the session, with the Dow Jones Transportation Average climbing by 1.2 percent.

Meanwhile, gold stocks moved lower along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 1.1 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan’s Nikkei 225 Index jumped by 1.5 percent and China’s Shanghai Composite Index climbed by 0.7 percent, although Hong Kong’s Hang Seng Index bucked the uptrend and slid by 0.8 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index edged down by 0.1 percent, the German DAX Index crept up by 0.2 percent and the French CAC 40 Index rose by 0.3 percent.

In the bond market, treasuries regained ground after coming under pressure in early trading, ending the day roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 4.239 percent after reaching a high of 4.293 percent.

Looking Ahead

Trading on Tuesday is likely to be driven by reaction to a report on consumer price inflation in the month of November, which could have a significant impact on the outlook for interest rates.

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