Stocks gained ground to start the new week, buoyed by hopes the Federal Reserve will start cutting interest rates at its September meeting. The main indexes also got a boost after Fed Chief Jerome Powell struck a dovish tone toward inflation.
Last week's encouraging inflation updates – most notably, the June Consumer Price Index (CPI), which fell for the first time on a monthly basis in nearly two years – helped lift expectations that the Fed will cut rates sooner rather than later.
Indeed, according to CME Group's FedWatch Tool, futures traders are pricing in an 89% chance the Fed will cut rates by a quarter-percentage point in September. This is up from 71% one week ago.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Powell did not indicate when the central bank would start cutting rates during his early afternoon Q&A session at the Economic Club. However, he did say recent economic data adds "somewhat to [the Fed's] confidence" that it can bring inflation back down to its 2% target.
The next big event on the economic calendar occurs tomorrow morning with the release of the June retail sales report. "Last month's report showed tepid sales, and we will be watching to see if consumers have continued to pull back on spending," says Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.
Apple nabs new record closing high
In single-stock news, Apple (AAPL) shares rose 1.7% to a new record closing high of $234.40 after Bloomberg News said annual revenue in India hit a record high of nearly $8 billion in the 12 months ended March 31.
Also boosting the mega-cap stock was a bullish note from Morgan Stanley analyst Erik Woodring, who said the company's recently announced artificial intelligence (AI) platform, Apple Intelligence, should lead to a multi-year upgrade cycle. As such, Woodring elevated AAPL to a top pick and boosted his price target to $273 from $216.
Goldman Sachs gets an earnings boost
Goldman Sachs (GS, +2.6%) was another booming blue chip stock that closed at a new record high after the big bank disclosed its second-quarter earnings report. GS easily beat analysts' top- and bottom-line estimates for the three-month period and reiterated the dividend hike it announced following last month's stress test results.
"We think GS is poised for higher earnings from investment banking fees given the bank has stated its backlog has increased significantly (and due to the firm's franchise strength in asset management)," says CFRA Research analyst Kenneth Leon (Buy).
DJT stock soars after Trump assassination attempt
Elsewhere, Trump Media & Technology Group (DJT) jumped 31.4% after a weekend assassination attempt against former President Donald Trump. The shooting occurred just ahead of this week's Republican National Convention where Trump earlier today secured his party's nomination for this fall's presidential election.
"Political violence is a risk for markets and we have seen volatility increase in the past few months in equity markets around the world given the elections in India and France," says Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management. "Unfortunately, we will have to plan for increased volatility in both stock and bond markets as our election nears given the rancor we have seen."
As for the main indexes, the Dow Jones Industrial Average climbed 0.5% to 40,211 – a new record closing high – the S&P 500 rose 0.3% to 5,631, and the Nasdaq Composite gained 0.4% to 18,472.
Related content
- Macy's Stock Plunges After Ending Buyout Talks: What to Know
- How to Live Like You've Won the Lottery
- Earnings Calendar and Analysis for This Week
-
The $33,000 Retirement: One Man's Surprising Path to Financial Freedom at 61Forget what society tells you, even with less than $1 million, you can be happy in retirement.
-
The Best Aerospace and Defense ETFs to BuyThe best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
The Best Aerospace and Defense ETFs to Buy
The best aerospace and defense ETFs can help investors capitalize on higher government defense spending or hedge against the potential of a large-scale conflict.
-
Roth IRA Conversions in the Summer? Why Now May Be the Sweet SpotConverting now would enable you to spread a possible tax hit over more than one payment while reducing future taxes.
-
A Financial Expert's Three Steps to Becoming Debt-Free (Even in This Economy)If debt has you spiraling, now is the time to take a few common-sense steps to help knock it down and get it under control.
-
I'm an Insurance Expert: This Is How Your Insurance Protects You While You're on VacationHere are three key things to consider about your insurance (auto, property and health) when traveling within the U.S., including coverage for rental cars, personal belongings and medical emergencies.
-
Stock Market Today: It's 'Most Sectors Go' Ahead of Independence DayThe resilience trade continues to work, even for sectors and stocks with specific uncertainties.
-
June Jobs Report Dashes July Rate Cut Hopes: What the Experts Are SayingThe June jobs report shows that hiring remains strong and gives the Fed a little extra breathing room when it comes to interest rates.
-
Investing Professionals Agree: Discipline Beats Drama Right NowBig portfolio adjustments can do more harm than good. Financial experts suggest making thoughtful, strategic moves that fit your long-term goals.
-
'Doing Something' Because of Volatility Can Hurt You: Portfolio Manager Recommends Doing This InsteadYes, it's hard, but if you tune out the siren song of high-flying sectors, resist acting on impulse and focus on your goals, you and your portfolio could be much better off.
