Major market indices rose Monday, and the Nasdaq ended the day at a new high as investors hoped that the Federal Reserve will lower interest rates in response to positive U.S. inflation data.
“Investors are feeling that lower interest rates lie ahead,” said Sam Stovall, chief investment strategist at CFRA Research.
The tech-heavy Nasdaq Composite Index broke a record established last month, rising 0.5 percent to 21,798.70.
The broad-based S&P 500 increased by 0.2 percent to 6,495.15, while the Dow Jones Industrial Average gained 0.3 percent to 45,514.95.
Markets are focusing on this week’s consumer and producer price reports after Friday’s poor jobs data heightened anticipation of a Federal Reserve interest rate drop later in September.
Fed Chair Jerome Powell’s speech at the central bank’s Jackson Hole event on August 23 indicated a shift, which increased expectations that the Fed will shortly lower interest rates.
Powell had previously argued the Fed could keep rates unchanged in light of inflation that has lingered above the Fed’s long-term target level while the US economy chugged along.
But the weakening of the jobs market has led more policymakers to argue the need to cut rates to forestall further deterioration.
“I think the Fed has locked itself into cutting rates in September,” Stovall said. “The only outlying question based on future economic reports(…) is, will they cut once, twice or three times this year?”
Among individual companies, Robinhood Markets jumped 15.8 percent after the trading company was added to the S&P 500 index.
