Dow Nears Record as Wall Street Sees Mixed Trading

Dow nears all-time high/ Dow Jones record level/ Wall Street stock movements/ Newslooks/ NEW YORK/ Morning Edition/ J. Mansour/ The Dow Jones Industrial Average rose 246 points on Monday, nearing a record high, while the S&P 500 dipped 0.2%. Mixed trading saw tech stocks like Apple and Nvidia decline, pulling down the Nasdaq by 1.1%. Meanwhile, anticipation grows for the Federal Reserve’s rate cut decision on Wednesday.

Dow Nears Record Quick Looks:

• Dow Jones Industrial Average gained 246 points, approaching a record high.
• S&P 500 dropped 0.2%, 0.9% below its July peak.
• Nasdaq fell 1.1% due to declines in tech giants Apple and Nvidia.
• Alcoa shares surged 5.9% after announcing a Saudi joint venture sale.
• Treasury yields slightly fell ahead of the anticipated Fed rate cut.

Dow Nears Record as Wall Street Sees Mixed Trading

Deep Look:

Wall Street witnessed mixed trading on Monday, with the Dow Jones Industrial Average making strides toward a record high, while the S&P 500 and Nasdaq saw declines. The Dow rose 246 points, or 0.6%, continuing its upward trajectory as it inches closer to an all-time high. In contrast, the broader S&P 500 dipped by 0.2%, putting it just 0.9% below its July record. The Nasdaq Composite, heavily influenced by tech stocks, dropped 1.1%, reflecting declines in major technology companies like Apple and Nvidia.

Monday’s trading comes after a turbulent few weeks for U.S. markets. The S&P 500 experienced its worst week in nearly 18 months, only to bounce back last week with its best performance of the year. The current mixed performance could signal a brief reprieve as investors await more concrete economic developments.

Alcoa was a standout on Monday, with its shares soaring 5.9% following news of a significant business deal. The aluminum giant announced it would sell its stake in a Saudi Arabian joint venture to Saudi Arabian Mining Co. for $950 million in stock and $150 million in cash. The sale is expected to provide Alcoa with more liquidity, boosting investor confidence.

However, not all stocks shared in the upward momentum. Big Tech stocks struggled, with Apple and Nvidia each falling over 3%. These two companies are some of the most valuable in the market, making their movements particularly influential on the overall performance of indexes like the Nasdaq. Apple dropped by 3.7%, while Nvidia declined by 3.8%, dragging the Nasdaq down and reflecting investor caution in the tech sector.

In the bond market, Treasury yields dipped slightly as traders looked ahead to what could be the most significant financial event of the week—the Federal Reserve’s decision on interest rates. The Fed is widely expected to cut its main interest rate for the first time in over four years, offering some relief to the slowing U.S. economy. While a rate cut is almost certain, the magnitude of the cut is still up for debate.

Data from the CME Group shows that traders are increasingly betting on a larger cut of half a percentage point, with a 63% chance of such a move, up from 50% just last Friday. This shift comes as market participants weigh the potential benefits of a deeper cut, which could provide a stronger stimulus to the economy, against the risk of reigniting inflation.

The Federal Reserve has kept its key interest rate at a two-decade high to combat inflation, which surged in recent years. But with inflation now easing, the Fed has indicated it may turn its focus toward bolstering the labor market and supporting economic growth.

Treasury yields reacted to this speculation, with the 10-year yield falling to 3.64% from 3.66% late Friday. The two-year Treasury yield, which is more sensitive to expectations of Fed policy changes, also slipped, ending the day at 3.55%, down from 3.59%. These slight declines suggest that the bond market is positioning itself for a likely rate cut from the central bank on Wednesday.

In the broader economy, a surprising report showed that manufacturing activity in New York state rebounded in September. Economists had expected another month of contraction, particularly given the impact of high interest rates on industrial production. Instead, manufacturing saw unexpected growth, offering a rare bright spot in an otherwise sluggish economic landscape.

International stock markets also reflected mixed sentiment. Hong Kong’s Hang Seng index climbed 0.3%, buoyed by data showing a further slowdown in China’s economy for August. While this slowdown may seem concerning, it appears to have already been priced in by markets, allowing for some modest gains. Meanwhile, markets in Japan, mainland China, and South Korea were closed for public holidays, leading to lighter trading volumes in the region.

As investors await more clarity on the Federal Reserve’s upcoming policy decision, Wall Street remains cautiously optimistic. The Dow’s rise toward record levels suggests some confidence in the strength of the U.S. economy, while declines in tech stocks show that concerns about interest rates and inflation still weigh heavily on certain sectors.

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