Stocks were little changed to start the new week as investors continued to digest last week's jumbo-sized rate cut from the Federal Reserve. Still, two of the three main benchmarks managed to end at fresh highs.
This week's economic calendar features a laundry list of central bank speeches, including one from Fed Chair Jerome Powell on Thursday. Today, Chicago Fed President Austan Goolsbee said that data supported the central bank's 50 basis-point rate cut (0.50%) at last week's meeting.
He added that interest rates "need to come down significantly going forward" so that the Fed can keep inflation near its 2% target and the labor market healthy.
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.
According to CME Group's FedWatch Tool, futures traders are currently pricing in 50-50 odds that the central bank will cut rates by either a quarter-percentage point or a half-percentage point at its next meeting in November.
Data show weakness in manufacturing sector but strength in services
Also in focus today were flash purchasing managers index (PMI) data from S&P Global, which showed the manufacturing sector contracted by a wider-than-expected margin in September, while the services sector grew at a faster pace than anticipated.
Manufacturing activity was dismal "as elevated prices, lofty borrowing costs, reduced credit availability, and job uncertainty weighed on order books," says José Torres, senior economist at Interactive Brokers.
And while servicers reported stellar demand, this was accompanied by "fiery price pressures," he adds.
Microsoft gets a rare downgrade
In single-stock news, Microsoft (MSFT) slipped 0.4% after the blue chip stock was hit with a rare downgrade from D.A. Davidson analyst Gil Luria.
The analyst cut his recommendation on the stock to Neutral (the equivalent of Hold) from Buy, saying the company's "significant lead" over Alphabet (GOOGL, -1.1%) and Amazon.com (AMZN, +1.2%) "is now diminished in both the cloud business and code generation business," which will make it harder for MSFT to outperform.
Wall Street is overwhelmingly bullish toward Microsoft. Of the 56 analysts covering the Dow Jones stock that S&P Global Market Intelligence tracks, 39 say it's a Strong Buy and 14 call it a Buy. Just three analysts have it at Hold and not one believes it's a Sell. This works out to a consensus Strong Buy recommendation.
Intel climbs on buyout buzz, possible Apollo investment
Intel (INTC, +3.3%) also made headlines Monday after reports surfaced at the end of last week that Qualcomm (QCOM, -1.8%) approached its fellow chipmaker about a possible takeover. According to The Wall Street Journal, "a deal is far from certain," and any potential buyout of Intel, which boasts a $96 billion market cap, would face a lengthy regulatory approval process.
Stifel analyst Ruben Roy believes a QCOM-INTC merger makes sense for Qualcomm in terms of "diversification into the PC market and synergies with the smartphone modem and applications processor business." However, he thinks it is unlikely the chipmaker "would be able to quickly improve INTC's positioning in data center/AI compute or manufacturing."
In other Intel news, a report from Bloomberg indicated Apollo Global Management (APO, +0.6%) is considering a $5 billion investment in the tech giant, though no deal has been formally announced.
Micron stock pops ahead of earnings
Micron Technology (MU) gained 2.9% ahead of the memory chipmaker's Wednesday evening turn on the earnings calendar.
"It's been roughly a year since memory prices bottomed, and in recent months there are signs that average-selling-price (ASP) strength is moderating," says Stifel analyst Brian Chin. He expects Micron to report "relatively inline" fiscal Q4 results but lowered his outlooks for fiscal Q1 and Q2.
However, Chin believes these lowered expectations are priced into the shares ahead of earnings and maintains a Buy rating on the semiconductor stock.
As for the main indexes, the Dow Jones Industrial Average rose 0.2% to 42,124 and the S&P 500 added 0.3% to 5,718, both finishing at new record closes. The Nasdaq Composite gained 0.1% to 17,974.
Related content
-
Will Your State End Tax on Tips This Year?State Tax While President Trump spearheads federal talk on tips, several key states are considering ending taxes on tip income.
-
From wire fraud to fake listings, real estate scams are becoming more sophisticated. Discover how to protect yourself from common scams in 2025.Learn how to recognize and prevent the latest real estate scams.
-
Alternative Investments Under Trump: What You Need to KnowAs access to alternative markets opens up, retail investors looking to enhance their long-term financial outcomes have more opportunities to carefully consider.
-
Beware of TV/Billboard Personal Injury Law Firms: Here's WhyIf you or someone you know is tempted to hire a so-called settlement mill to handle a personal injury case, here are some reasons to reconsider.
-
How Small Businesses Can Clear the Economic Hurdles AheadShifting rules on taxes, trade and regulation are creating uncertainty for SMBs. Owners can overcome that by focusing on efficiency, flexibility and investment.
-
Stock Market Today: Dow Adds 353 Points Despite Soft Retail SalesInvestors and traders shake off another set of shaky economic numbers and send 10 of 11 sectors higher on Monday.
-
CoreWeave IPO: Should You Buy CRWV Stock?The CoreWeave IPO will mark the biggest public offering of the year, with the AI cloud company expected to start trading on the Nasdaq in late March.
-
Nvidia Stock's Been Growing for Years. Just Look At Its 100,000% ReturnNvidia shareholders have had to stomach intense volatility over the years, but they have come out on top thanks to the AI chipmaker's bellwether status.
-
10 Tax Topics Every Retiree Should Know AboutA little knowledge can go a long way toward saving on your tax bill. Print this out and take it to your tax planner so you can have a productive chat.
-
It's No Surprise That Berkshire Hathaway's in the 100,000% Return ClubWarren Buffett's fascination with the insurance industry has helped Berkshire Hathaway's stock return snowball.
