Stocks edged into record closing territory Monday, as investors headed into the final full trading week of the month focused on the growth and inflation backdrop ahead of the third-quarter earnings season.
The Dow Jones Industrial Average gained 61.29 points, or 0.15%, to close at a fresh record high of 42,124.65. Not to be outdone, the S&P 500 rose 0.28% to end at a fresh high of 5,718.57, while the tech-heavy Nasdaq advanced 0.14% to end the session at 17,974.27.
“The ‘third’ and final estimate of second quarter GDP, the Personal Income and Outlays report for August, and S&P Global's Flash PMs are the most important economic data releases this busy week,” said Bill Adams, Chief Economist for Comerica Bank. “The Bureau of Economic Analysis is likely to keep its 3.0% growth estimate unrevised, when it releases its ‘third’ and final estimate of second quarter GDP on Thursday.”
Adams said that paralleling a strong increase in average hourly earnings, personal incomes likely rose by 0.5% in August.
Personal spending, however, likely rose at a more tepid pace, in line with the month's modest increase in retail sales.
“Headline and core Personal Consumption Expenditures (PCE) Price Indices—the Fed's preferred inflation gauges— probably increased modestly in August, validating the Fed's rate cuts last week,” Adams said.
“S&P Global's Flash PMI estimates will provide the earliest read on business conditions in September, probably showing no material change from August, with manufacturing in contraction and the services sector, which accounts for most of the economy, in solid expansionary territory," he added.
Updated at 11:13 AM EDT
Turbo Tesla
Tesla shares jumped firmly higher in early trading after Goldman Sachs analyst Mark Delaney reiterated his 'neutral' rating and $230 price target on the carmaker ahead of its third quarter delivery figures, which are expected next week, and its robotaxi unveiling event on October 10 in Los Angeles.
Delaney said Tesla could still announce details of a lower-price EV at the event, which was delayed from early August, adding that "the timeline to begin commercial operations in robotaxis ... will be key areas of focus for investors."
Tesla shares were last marked 4.4% higher in late-morning trading and changing hands at $248.62 each.
Related: Goldman Sachs analyst revisits Tesla stock price target ahead of key events
Updated at 9:36 AM EDT
Muted open
The S&P 500 was marked 10 points, or 0.19% higher in the opening minutes of trading, with the Nasdaq rising 17 points, or 0.10%.
The Dow was marked 65 points higher while the mid-cap Russell 200 gained 9.4 points, or 0.42%.
"With the Fed’s first rate cut since 2020 in the history books, many investors may be thinking, 'Now what?', said Chris Larkin, managing director for trading and investments at E*Trade from Morgan Stanley.
"With the November election picture yet to come into focus, a stock market near record highs will need other catalysts to extend its gains," he added. "That will keep the spotlight on economic growth, especially the jobs market. For now, we remain in a 'good news is good, bad news is bad' environment."
Updated at 8:46 AM EDT
Go big again
Minneapolis Fed President Neel Kashkari threw his support behind another 50 basis point rate cut in November, telling CNBC that the "balance of risks" to the U.S. economy has clearly shifted from inflation to the labor market.
Kashkari, a non-voting member of the Fed's rate-setting committee, said he'd "penciled in" another outsized cut, calling it a "reasonable starting point" that will be shaped by incoming data over the coming months.
Check back for updates throughout the trading day
Stocks ended mixed on Friday, although all three benchmarks booked solid gains for the week. The market move followed the first Federal Reserve rate cut in more than four years and data suggesting ongoing resilience in the labor market and better-than-expected underlying growth prospects, including August retail sales.
The Fed's 50 basis point reduction, which included forecasts for more cuts into the end of the year and beyond, has changed the interest rate picture for global risk assets. It looks to extend the S&P 500's recent run of gains, which has lifted the benchmark just under 1% higher for the month, putting it on pace for a solid 4.5% quarterly gain.
That outlook could be tested this week, however, as more than a dozen Fed officials, including Chairman Jerome Powell, are set to make public comments this week and the Bureau of Economic Analysis is set to publish its August inflation report, the central bank's preferred gauge, prior to the start of trading on Friday.
Still, CME Group's FedWatch now suggests at least a 52% chance of another 50 basis point cut from the Fed when it meets in November, and bets on the December meeting peg the Federal Funds Rate at between 4% and 4.52% by the end of the year.
Benchmark 2-year Treasury note yields were little changed from Friday's closing levels and were last marked at 3.568% heading into the start of the New York trading session, with 10-year paper trading at 3.739%.
The U.S. dollar index, however, was marked 0.34% higher against a basket of its global peers at 101.105. The figure followed the biggest one-day decline for the euro since June, a move tied to a weaker-than-expected reading for private-sector business activity in the world's biggest economic bloc.
Related: Fed speak, tech earnings and PCE inflation will test Wall Street this week
On Wall Street, stocks are looking at a muted open heading into the Monday session, with futures contracts tied to the S&P 500 suggesting an 5 point opening bell gain and those linked to the Dow Jones Industrial Average priced for a 7 point dip following last week's record high close.
The tech-focused Nasdaq, meanwhile, is priced for a 40 point gain thanks in part to premarket advances for Nvidia (NVDA) , Tesla (TSLA) and Google (GOOGL) .
Intel (INTC) shares were the most active early mover, rising 3.5% to $22.56 following a Bloomberg report that the struggling chipmaker is looking to close a $5 billion investment from Apollo Global Management. (APO)
Other stocks on the move include Palantir Technologies (PLTR) , which will begin trading on the S&P 500 today alongside Dell Technologies (DELL) and Erie Indemnity (ERIE) following the benchmark's regular quarter rebalancing.
American Airlines (AAL) , which is leaving the index, was marked 0.1% lower in premarket trading.
More Wall Street Analysts:
- Analyst says Intel should drop a key business to survive
- Analysts adjust Bookings.com stock price target on travel market
- Analysts place bets on Las Vegas strip casino stocks
In overseas markets, a soft reading for S&P Global's PMI indices for September, a benchmark that tracks private sector activity around the region, pushed bets on a European Central Bank rate cut, helping the Stoxx 600 benchmark rise 0.14% in early Frankfurt trading.
Overnight in Asia, a 10 basis point reduction in a key China lending rate, the central bank's 14-day repo rate, gave domestic stocks a modest boost, with the regional MSCI ex-Japan benchmark rising 0.15% into the close of trading.
Japan's Nikkei 225, meanwhile, was closed for the country's Autumnal Equinox observances.
Related: Veteran fund manager sees world of pain coming for stocks
