The Nasdaq hit a record high on Monday, boosted by gains in Broadcom, while the S&P 500 edged higher as investors bet on upcoming Federal Reserve interest rate cuts to support economic growth.
Market expectations for rate reductions grew after Friday’s weak nonfarm payrolls report signaled further cracks in the U.S. labor market. The disappointing data fueled concerns about a slowdown in the world’s largest economy.
Traders are now fully pricing in at least a 25-basis-point rate cut when the Fed concludes its two-day meeting on September 17. According to CME Group’s FedWatch tool, futures also reflect a 10% chance of a larger 50-basis-point move.
Market strategist Jake Dollarhide cautioned that expectations may be too high: “The focus is on next Wednesday’s Fed rate cut. The market is greedy. It’s already priced in 25 basis points. If people are betting on 50, that’s not going to happen.”
Fed Cut Outlook and Market Moves
Brokerages have adjusted their forecasts. Barclays now expects three 25-bp cuts in 2025, compared with two earlier, while Standard Chartered sees a larger 50-bp reduction in September.
Chipmaker Broadcom climbed 2.7%, extending gains after forecasting strong AI-driven revenue growth.
Investors are also watching this week’s inflation data and the Labor Department’s payroll revisions for further clues on the health of the U.S. economy. Analysts say labor market weakness may outweigh inflation concerns.
“The growth scare from the labor market is going to overwhelm even hot inflation,” said Jeff Schulze of Clearbridge Investments.
Market Performance
The S&P 500 gained 0.08% to 6,486.83, the Nasdaq rose 0.44% to 21,796.72, while the Dow slipped 0.11% to 45,349.78.
Eight of the S&P 500’s 11 sector indexes declined. Real estate dropped 1.28%, followed by a 1.11% fall in utilities.
Robinhood Markets and AppLovin surged 13% and 11%, respectively, after being added to the S&P 500 effective September 22.
EchoStar soared 18% after agreeing to sell wireless spectrum licenses to SpaceX’s Starlink for about $17 billion. In contrast, telecom stocks AT&T, Verizon, and T-Mobile slipped between 1% and 3%.
Declining stocks outnumbered advancers by 2.2 to 1 in the S&P 500. The index recorded 15 new highs and 8 new lows, while the Nasdaq posted 123 new highs and 85 new lows.
