U.S. stocks rose solidly Monday, building on last week’s gains as investors assessed the potential size of future Federal Reserve rate increases and awaited a slate of major tech company earnings.
What’s happening
- The Dow Jones Industrial Average DJIA, +0.85% rose 417 points, or 1.3%, to 31,498.
- The S&P 500 SPX, +0.52% was up 33 points, or 0.9%, at 3,786.
- The Nasdaq Composite COMP, -8.54% was little changed at 10,860.
The Dow rose 4.9% last week, while the S&P 500 advanced 5% for their largest such gains since the week ended June 24. The Nasdaq Composite gained 5.2% last week, its biggest rise since the week ended July 29.
What’s driving markets
A report in The Wall Street Journal that the Federal Reserve would debate whether to consider trimming the size of rate hikes in December helped contribute to Friday’s showing. Two regional Fed presidents, Charles Evans and Mary Daly, warned that rates could go too high. No comments are expected this week ahead of the Fed’s two-day rate-setting meeting that ends Nov. 2.
Markets also are gearing up for a wave of earnings, including from tech giants Alphabet GOOGL, +0.41%, Microsoft MSFT, +0.65%, Meta Platforms META, -0.28%, Apple AAPL, +0.28% and Amazon AMZN, -0.91% this week.
See: Stock-market investors brace for busiest week of earnings season. Here’s how it stacks up so far.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, points out that the correlation between S&P 500 stocks is at the highest levels since July 2020, which “makes this week’s Big Tech results even more crucial for the overall market mood, as Apple, Microsoft, Alphabet and Amazon, together, stand for 20% of the S&P 500’s total valuation.”
U.S.-listed Chinese companies including Alibaba BABA, -14.88% were under pressure after a tumble overnight in the Hang Seng HSI, -6.36%, after Chinese President Xi Jinping stacked the Chinese Communist Party leadership with close allies. Tesla Inc. shares TSLA, -4.74% felt pressure after Bloomberg reported the electric vehicle maker cut prices in China.
More positively, U.K. Treasury yields fell as ex-hedge-fund manager and former Chancellor of the Exchequer Rishi Sunak became Conservative Party leader, clearing the way for him to succeed Liz Truss as prime minister.