Wall Street gains as markets bet on Sep rate cut; Nasdaq hits record high

Wall Street's main indexes gained on Monday on expectations that the Federal Reserve could lower borrowing costs soon, while gains in chip major Broadcom pushed the Nasdaq to an intraday record high.

 

Investors are expecting multiple rate cuts this year after a troubling nonfarm payrolls report on Friday confirmed a weakening U.S. job market. The report, which had dragged down Wall Street in the previous session, has stoked fears of a potential slowdown in the world's biggest economy. 

Besides a 25-basis point rate cut that's priced in for September, investors are now also betting on a jumbo 50-bps reduction.

 

Traders see a 9.5% chance of a 50-basis-point cut, compared to no such expectation for weeks before the jobs data was released, as per the CME FedWatch Tool. 

Numerous brokerages have revised calls for Fed interest-rate cuts. Barclays now anticipates three cuts of 25 bps each in 2025 compared with two earlier, while Standard Chartered expects a 50-bps trim in September - up from its earlier projection of a 25-bps reduction. 

Meanwhile, chip designer Broadcom gained 4%, adding to its 9.4% rise from Friday. The stock is on track to register its tenth session of gains in eleven. 

The stock boosted the information technology sector up 1%. Real estate stocks, which had rallied on Friday, fell 1.2%. 

At 11:44 a.m. ET, the Dow Jones Industrial Average rose 62.75 points, or 0.14%, to 45,463.61, the S&P 500 gained 20.94 points, or 0.33%, to 6,502.44 and the Nasdaq Composite gained 163.26 points, or 0.75%, to 21,863.65. 

This week, investors will keep a close watch on inflation data and the Bureau of Labor Statistics' benchmark payroll revision for further clues on the U.S. economic health and to see if they could strengthen the case for a bigger rate cut. 

"The growth scare from the labor market is going to overwhelm even hot inflation because the Fed right now is viewing any tariff-induced inflation as a one-time price increase," said Jeff Schulze, head of economic and market strategy at Clearbridge Investments. 

With the Fed in a "blackout" period that bars public statements in the run-up to its September 16-17 meeting, markets will have to interpret economic data without fresh guidance from policymakers in the meantime. 

The S&P and the Nasdaq logged gains last week, in a positive start to a historically dour September. The benchmark S&P 500 has lost 1.5% on average in the month, its worst month since 2000, data compiled by LSEG shows. 

Among other stocks, retail trading platform Robinhood Markets and marketing platform AppLovin gained 14.5% and 11.4%, respectively. The companies are set to join the S&P 500, effective September 22. 

EchoStar soared 13.2% after the telecommunications services firm agreed to sell wireless spectrum licenses to SpaceX for its Starlink satellite network for about $17 billion. 

Other telecommunications companies fell, with AT&T, Verizon and T-Mobile slipping between 1.8% and 3%. 

Advancing issues outnumbered decliners by a 1.31-to-1 ratio on the NYSE and by a 1.18-to-1 ratio on the Nasdaq. 

The S&P 500 posted 14 new 52-week highs and 8 new lows, while the Nasdaq Composite recorded 114 new highs and 74 new lows.