US stocks rebound as investors bet on potential Fed rate cut

US stocks surged overnight as investors bought the dip following Wall Street's worst week of the year, with hopes that a potential Federal Reserve rate cut later this month would help support a slowing economy.

The Dow Jones Industrial Average soared 484.18 points, or 1.2 per cent, to close at 40,829.59, rebounding after losing more than 1,200 points last week. The S&P 500 rose 1.16 per cent, ending the day at 5,471.05, marking its best day in over a week and snapping a four-day losing streak after suffering its worst performance since March 2023. The Nasdaq Composite also jumped 1.16 per cent, closing at 16,884.60, following its worst week in more than two years.

Turning to US sectors, all sectors closed higher overnight. Consumer Discretionary was the best performer overnight, whilst Communication Services recorded the fewest gains.

Nvidia, which had dropped 14 per cent last week, climbed 3.5 per cent on Monday, contributing to the tech-heavy index's recovery.

Palantir and Dell Technologies also saw notable gains of 14 per cent and 3.8 per cent, respectively, after S&P Dow Jones Indices announced late Friday that both stocks would be added to the S&P 500.

Apple’s latest iPhone launch drew attention as the tech giant introduced a new model featuring artificial intelligence capabilities, potentially boosting the stock and strengthening the AI investment narrative in the markets.

Beyond tech, retailers, banks, and industrial stocks also bounced back as investors speculated that a rate cut could boost consumer spending. JPMorgan Chase, Costco, Amazon, and Boeing were among Monday’s top performers.

Shares of Summit Therapeutics surged as much as 75.2 per cent on Monday before settling at a 56 per cent gain by The biotech firm had released the results of a Phase III study on Sunday at the 2024 World Conference on Lung Cancer in San Diego. The data demonstrated that its lung cancer treatment outperformed the current standard of care from Merck.

Market participants are now eagerly awaiting key inflation data that could influence the Fed’s decision at its Sept. 18 meeting. The August Consumer Price Index (CPI) and Producer Price Index (PPI) reports, due Wednesday and Thursday, are expected to provide crucial insight into inflation trends. Traders are confident that the Fed will implement at least a quarter-point rate cut.

Monday's rally follows a difficult start to September, traditionally a challenging month for stocks. Last week’s declines were partly triggered by the August jobs report, which raised concerns about a weakening labor market. Historically, the S&P 500 has averaged a 0.7 per cent decline in September, the worst performance of any month, according to the Stock Trader's Almanac.

Futures

The SPI futures are pointing to a 1 per cent gain.

Currency

One Australian dollar at 7.45am was buying 66.62 US cents.

Commodities

Gold added 0.32 per cent. Silver gained 1.66 per cent. Copper rose 1.74 per cent. Oil gained 1.54 per cent.

Figures around the globe

European markets closed higher. London’s FTSE added 1.09 per cent, Frankfurt gained 0.77 per cent, and Paris closed 0.99 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei fell 0.48 per cent, Hong Kong’s Hang Seng lost 1.42 per cent, while China’s Shanghai Composite closed 1.06 per cent lower.

Yesterday, the Australian share market closed 0.32 per cent lower at 7988.

Ex-dividends
BlueScope Steel Ltd (ASX:BSL) is paying 30 cents fully franked
News Corp (ASX:NWS) is paying 10.6838 cents unfranked
Eagers Automotive (ASX:APE) is paying 24 cents fully franked
Shriro Holdings Ltd (ASX:SHM) is paying 3 cents fully franked
Naos Smlcap Com Ltd (ASX:NSC) is paying 1.25 cents fully franked
SG Fleet Group Ltd (ASX:SGF) is paying 24.3 cents fully franked
Naos Ex-50 (ASX:NAC) is paying 1.5 cents fully franked
Regis Healthcare Ltd (ASX:REG) is paying 6.64 cents 50 per cent franked
Peet Limited (ASX:PPC) is paying 2.75 cents fully franked

Dividends payable
Bell Financial Group Ltd (ASX:BFG)
SHAPE Australia Corp Ltd (ASX:SHA)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap, Marketech.isclaimer

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