Stocks are trending upward toward more records this Monday, anticipating a week filled with significant events for Wall Street that could impact the market.
TL;DR
- Wall Street anticipates a pivotal week with Trump-Xi talks and Federal Reserve decisions impacting market trends.
- Asian markets rose on optimism for U.S.-China trade tensions easing, potentially boosting global economic momentum.
- Stock gains are fueled by hopes for Federal Reserve rate cuts and strong U.S. business profit growth.
- Major tech companies like Alphabet, Meta, Microsoft, Amazon, and Apple will release earnings reports this week.
The S&P 500 climbed 0.8%. The Dow Jones Industrial Average gained 210 points, representing a 0.4% increase, by 9:35 a.m. Eastern time, while the Nasdaq composite saw a 1.3% rise. These gains extend their recent record highs established on Friday.
Asian markets saw gains as anticipation built for a meeting on Thursday involving the leaders of the United States and China. The expectation is that these discussions might resolve rising tensions hindering the planet's two biggest economies, thereby enabling continued global economic momentum.
U.S. Treasury Secretary Scott Bessent said there’s “a framework” for U.S. President Donald Trump and Chinese leader Xi Jinping to discuss at their meeting, while Trump said, “We feel good” about working things out with China.
For the U.S. Stock market's impressive, record-setting surge to persist, numerous factors must align favorably this week. The S&P 500 has experienced a remarkable 37% increase from Its April low, a period marked by heightened concerns regarding Trump’s tariffs in China and elsewhere. Beyond optimism about reduced trade friction, this upward trend has also been fueled by expectations of expectations for several more things occurring.
One possibility is that the Federal Reserve will keep cutting interest rates to stimulate the slowing job market. Traders widely anticipate the Fed's upcoming interest rate announcement on Wednesday will include a second consecutive quarter-point reduction in the federal funds rate.
However, it's not guaranteed, as the Fed has also cautioned that it might need to alter its strategy if inflation climbs further past its already elevated rate. This is due to the fact that low interest rates can exacerbate inflation.
The latest monthly report on inflation came in slightly better than economists expected, raising hopes, but it may be the final update for a while if the U.S. Government’s shutdown continues. That could cloud the forecast for cuts to rates to continue.
In addition to low interest rates, projections that U.S. Businesses will maintain strong profit growth have also supported stock values.
Keurig Dr Pepper saw a 4.9% increase on Monday, following the announcement of quarterly profits that met analyst predictions. The firm, which owns the Canada Dry and Green Mountain coffee labels, attributed its success partly to increased pricing on K-Cup items.
This coming week will also see some of Wall Street's most significant companies release their newest earnings reports. On Wednesday, investors will hear from Alphabet, Meta Platforms, and Microsoft, followed by Amazon and Apple on Thursday. These companies must demonstrate substantial growth and validate the considerable investments currently being made in artificial-intelligence technology.
Worries have been climbing that AI may be in the midst of a bubble, similar to the dot-com bonanza that ended up bursting in 2000.
European stock markets saw mixed performance, with most indexes experiencing slight shifts after significant increases in Asian markets.
Shanghai stocks climbed 1.2% with Hong Kong shares up 1%. Tokyo's Nikkei 25 saw an even greater increase, jumping 2.5%, while South Korea's Kospi in Seoul rallied 2.6%.
The 10-year Treasury yield in the bond market remained unchanged at 4.02%, mirroring its level from Late Friday.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.