S&P 500 Near Record Highs as Investors Await Fed's Rate Cut Decision

Market Overview

Stock futures remained flat early Monday as investors focused on the upcoming Federal Reserve meeting, where a rate cut is widely anticipated. The S&P 500 is within 1% of its July record high, setting the stage for potential new all-time highs this week. After a historically weak start to September, major U.S. indexes finished last week with strong gains, as the S&P 500 and Nasdaq recorded their best weeks of 2024.

Daily E-mini S&P 500 Index

• The E-mini S&P 500 Index is within striking distance of the September 3 top at 5669.75.
• This is the only resistance standing in the way of the all-time high at 5721.25.
• On the downside, the major support is the 50-day moving average at 5540.70.

Wall Street Comes Off Strong Week

U.S. stock markets posted robust performances last week despite significant intraday volatility. The Dow Jones Industrial Average climbed 2.6%, its fourth gain in five weeks, while the S&P 500 surged 4%, marking its biggest one-week gain since November. The tech-heavy Nasdaq led the charge with a nearly 6% increase, also its best since November, as optimism built around the Fed’s policy decision.

Stocks in Focus

• Trump Media & Technology shares rose 1%, continuing Friday’s 11% surge after Donald Trump declared he wouldn’t sell his stake.
• Upstart Holdings fell over 4% after announcing a $300 million debt offering.
• Apple dropped more than 2% amid concerns that iPhone 16 Pro models are seeing softer demand.
• Bausch + Lomb jumped 11.5% on reports of a possible sale that could attract private equity interest.
• Alcoa gained 1.4% after announcing the sale of its stake in a mining venture for $1.1 billion.
• Intel rose 1.3% following news that it could qualify for $3.5 billion in grants for military chip production.
• Micron Technology slid 2.8% after Morgan Stanley slashed its price target by $40.

Fed Set to Cut Rates, Debate on Size Continues

Investors are split over whether the Fed will cut rates by 25 or 50 basis points. The CME Group’s FedWatch tool shows a 61% probability of a 50-basis-point cut, up from 39% the prior week. The central bank’s decision, alongside updated economic projections, could significantly influence borrowing costs and corporate earnings growth.

Outlook: Market Awaits Fed Clarity

Historically, U.S. stocks have rallied during rate-cut cycles, particularly when cuts are seen as boosting economic expansion. However, with markets already showing strong gains year-to-date, future returns may be more tempered. If the Fed’s cut stabilizes the economy, traders can expect continued bullish momentum, though possibly at a slower pace.