- US stocks rose Monday, with the Dow closing at a record high amid hopes for more rate cuts.
- Odds of a 50 basis point rate cut at the next FOMC meeting increased to 53%, up from 29% last week.
- Comments from Fed officials helped fuel expectations for further easing from the central bank.
US stocks gained on Monday with the Dow Jones Industrial and S&P 500 closing at record highs as hopes of more Fed interest rate cuts ramped up.
The odds of another 50 basis point rate cut at the Federal Reserve's next FOMC meeting in November hit 53% on Monday compared to 29% a week ago, according to the CME's FedWatch Tool.
A steady stream of dovish Fedspeak from Chicago Fed President Austan Goolsbee and Minneapolis Fed President Neel Kashkari helped fuel hopes for more rate cuts.
Answering questions at an event in Chicago, Goolsbee said it is now appropriate for the Fed to focus less on inflation and more on the jobs market.
"That likely means many more rate cuts over the next year," Goolsbee said, adding that if the Fed wants to see a soft landing in the economy, they can't get behind the curve.
The market responded to the outlook for more easing fro the central bank. According to the CME FedWatch Tool, markets expect the Fed funds rate to fall to below 3% by the end of 2025, from 4.83% on Monday.
That lines up with Kashkari's projection for the long-term Fed funds rate to sit at around 2.9%.
"The balance of risks has shifted away from higher inflation and toward the risk of a further weakening of the labor market, warranting a lower federal funds rate," Kashkari wrote in a note on Monday.
There are nine more speaking engagements scheduled for Fed members this week.
Investors will also decipher key economic data later in the week, including consumer confidence data on Tuesday, another revision to second-quarter GDP growth on Thursday, and fresh inflation data on Friday with the release of the personal consumption expenditures index.
The Federal Reserve's preferred inflation gauge is expected to show prices increased 2.2% last month, edging closer to the central bank's 2% target.
Here's where US indexes stood at the 4:00 p.m. closing bell on Monday:
- S&P 500: 5,718.57, up 0.28%
- Dow Jones Industrial Average: 42,124.65, up 0.15% (+61.29 points)
- Nasdaq composite: 17,974.27, up 0.14%
Here's what else is going on:
- Investors shorting oil are walking into a 'bear trap' with energy demand set to surge, BofA said.
- The job market is about to rebound as widespread spending boosts the economy, an economist said.
- Economic conditions are 'nearly perfect' and the Fed has engineered a 'miraculous' achievement, Roger Altman said.
- JD Vance is worried about a potential 'death spiral' in the bond market, according to a recent interview.
- Baby boomer's massive wealth in the stock and housing markets presents a risk to the economy.
- Housing affordability could be a key issue for swing state voters in November, according to Redfin.
In commodities, bonds, and crypto:
- West Texas Intermediate crude oil decreased 0.73% to $70.48 a barrel. Brent crude, the international benchmark, was down 0.67% to $73.99 a barrel.
- Gold was up 0.19% to $2,651.20 an ounce.
- The 10-year Treasury yield was up about 1 basis point at 3.751%.
- Bitcoin was down 0.37% to $63,352.
