By Steven Kolb
NEW YORK (Reuters) – U.S. stocks rose on Monday, posting their biggest weekly percentage gain this year as investors focused on the Democratic National Convention and the upcoming Jackson Hole Economic Symposium.
The tech-heavy Nasdaq led all three major U.S. stock indexes to a higher close, helped by Nvidia (NASDAQ:), Microsoft (NASDAQ:), and Alphabet (NASDAQ:).
U.S. stock indexes and the Nasdaq extended their winning streak to eight straight sessions, the longest in 2024, as stocks continued to recover from a sharp sell-off two weeks ago driven by recession fears.
The rise comes after the US stock market posted its biggest weekly gain this year, with the three major indexes jumping between 2.9% and 5.3%.
Recent data showed consumer resilience despite the economic slowdown, boosting expectations that the Federal Reserve will begin cutting interest rates at its September policy meeting by lowering the federal funds target rate by 25 basis points.
“What’s behind (this rally) is the hope that the taps will remain open with the possibility of the Fed cutting interest rates in September,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Silvest in Elmhurst, Illinois.
“Money is looking for a place to go, and it’s going to the stock market.”
A narrow majority of economists polled by Reuters say the Fed will deliver three 25 basis point rate cuts by the end of the year, and the economy is likely to avoid a recession as inflation eases.
The Jackson Hole Economic Symposium kicks off on Thursday, and Federal Reserve Chairman Jerome Powell’s remarks on Friday will be analyzed for clues about the U.S. central bank’s path from a dovish to a neutral monetary policy.
“I think (Powell) will reiterate some of the points that the Fed has made, which is that they are a little bit more comfortable with the fact that inflation is getting closer to target. They are comfortable that the economy is doing reasonably well, and markets will interpret that as opening the door to a rate cut in September,” Nolte added.
The Democratic National Convention in Chicago, which begins Monday, could fuel market volatility that has already been heightened by light trading volume in late summer.
The Chicago Board of Trade’s Volatility Index, a gauge of investor anxiety, fell at a record pace last week from a four-year high amid growing optimism about a soft landing.
Goldman Sachs has cut the probability of a U.S. recession in the next 12 months to 20% from 25% after the latest weekly jobless claims and retail sales reports.
The S&P 500 rose 54 points, or 0.97%, to 5,608.25 and added 245.05 points, or 1.39%, to 17,876.77.
All 11 major S&P 500 stocks rose, with telecommunications services the biggest gainers.
Advanced Micro Devices (NASDAQ:) rose 4.5% after the chipmaker said it plans to acquire server maker ZT Systems for $4.9 billion to expand its artificial intelligence portfolio to better compete with Nvidia.
Shares of B. Riley Financial fell 5.8%, extending a more than 65% slide last week. Co-founder and co-chief executive Bryant Riley offered to buy the bank on Friday after warning that his investment in Vitamin Shoppe owner Franchise Group (NASDAQ:FG) would hurt him.
Cybersecurity company Palo Alto Networks (NASDAQ: ), retailer Target and home improvement chain Lowe’s (NYSE: ) are scheduled to report quarterly results later this week.
Advancing issues outperformed declining issues on the NYSE by a ratio of 3.54 to 1; on the Nasdaq, the ratio was 2.71 to 1.
The S&P 500 recorded 32 new 52-week highs and no new lows, and the Nasdaq Composite recorded 105 new highs and 65 new lows.
Trading volume on U.S. exchanges was 10.30 billion shares, compared to the average of 12.24 billion shares for the full session over the last 20 trading days.