Wall Street Builds on Last Week's Gains with Rate Cut Optimism
U.S. stock indexes closed higher on Monday, continuing gains from Friday and marking the best three-day rally of the year.
Technology companies led the way as traders increased Federal Reserve rate cut expectations.
Preliminary data from the New York Stock Exchange (NYSE) indicates that the Dow Jones Industrial Average rose +175.34 points, or +0.45%, to 38,851.02.
The broad-based S&P 500 Index gained +52.91 points, or +1.03%, to end at 5,180.70, while the tech-heavy Nasdaq Composite Index gained +191.55 points, or +1.19%, to 16,347.88.
Tech giants like Nvidia and Super Micro Computer led the market rally, driven by enthusiasm around artificial intelligence.
Nvidia surged +3.8% on Monday, pushing its year-to-date gains to +86.1%, while Super Micro soared +6.1%, bringing its year-to-date increase to +192.1%.
During earnings season, most of the "Magnificent Seven" companies have surpassed estimates, with only Tesla missing expectations.
Among the "Magnificent Seven", Tesla rose by +2%, Microsoft increased by +1.7%, Apple decreased by -0.9%, Nvidia gained by +3.8%, Alphabet (Google) grew by +0.5%, Amazon added +1.3%, and Meta (formerly Facebook) increased by +3%.
With limited economic data in the days ahead, traders will focus on earnings reports and comments from Federal Reserve officials.
Richmond Fed President Barkin anticipates that current rates will stabilize the economy and bring inflation to the 2% target, while New York Fed President Williams views monetary policy favourably and hints at potential rate cuts later.
The possibility of rate cuts gained traction after the release of the April jobs report, which fell short of expectations. The US economy added 175,000 jobs last month, compared to forecasts of nearly 250,000.
Market focus is expected to shift back to earnings reports, with notable releases this week, including Walt Disney on Tuesday and Uber Technologies on Wednesday.
In the U.S. government bond markets, the yield on the 10-year Treasury, which influences mortgage rates and other economy-dictating loans, closed at 4.49%. Additionally, the policy-sensitive two-year yield, reflecting market expectations of future Fed moves, closed at 4.83%.
The leading cryptocurrency, Bitcoin, saw a relatively flat performance, trading within an intraday range of US$62,730.00 to US$65,448.00 before closing at US$63,500.00.
Now entering a consolidation phase around the critical level of US$56,000.00, there's potential for a recovery.
Bullish investors are targeting a move towards US$78,000.00 to US$81,000.00.
However, a breach below the critical support level of US$56,000.00 could disappoint bullish sentiment, prompting a reassessment of market direction.
This shift in sentiment may cause investors to reconsider their positions and overall market outlook, potentially leading to a larger bearish outcome.
In such scenarios, traders should expect increased volatility.
Therefore, closely monitoring price action and adjusting trading strategies becomes essential for navigating the cryptocurrency market.
Meanwhile, Ethereum, the second-largest blockchain in terms of cryptocurrency market capitalization, traded within a daily range of US$3,048.00 to US$3,220.00 before closing at US$3,080.00.
Precious metal prices were firmer, with spot gold closing at $2,325 per ounce and silver closing at $26.44.
In the energy markets, Brent crude, the global benchmark, rose to $83.60, while the U.S. benchmark, West Texas Intermediate, settled at $78.56.
The U.S. Dollar Index (U.S. DXY), tracking the dollar against six major currencies, was flat at 105.10.
Meanwhile, the Eurodollar was 1.0764, and the British pound finished at 1.2562. The Japanese yen ended at 153.88, while the Australian dollar was at 0.6622.
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