Traders work on the floor at the New York Stock Exchange on July 3, 2024.
Brendan Mcdermid | Reuters
U.S. stocks jumped on Monday after investors bought the dip following Wall Street's worst week of the year, betting that a likely Federal Reserve rate cut later this month would bolster a slowing economy. Technology shares, among the hardest-hit stocks last week, were Monday's top performers.
The Dow Jones Industrial Average surged 484.18 points, or 1.2%, to close at 40,829.59. The rebound comes after the 30-stock index lost more than 1,200 points last week. The S&P 500 gained 1.16%, ending at 5,471.05, after posting its worst week since March 2023. The benchmark also broke a four-day losing streak.
The Nasdaq Composite jumped 1.16% to end at 16,884.60, following its worst week in more than two years. Nvidia's 3.5% gain helped lift the tech-heavy index. The artificial intelligence darling lost 14% last week.
Outside of tech, retailers, banks and industrial shares also mounted a comeback as investors believe a rate cut would give a boost to the flagging consumer. JPMorgan Chase, Costco, Amazon and Boeing were among the winners on Monday.
S&P 500, 1 month
"I do think you have a little short-term bounce here — we were a little bit oversold last week. However, the markets are very focused on how the economy is going to be now, rather than what inflation is going to do and what the economy is going to do," said Sarat Sethi, managing partner at Douglas C. Lane & Associates. "When the uncertainty starts building … first thing you do is take some money off, especially since you've had such a good run this year."
Investors are awaiting two key inflation reports that could further inform the Fed's rate decision on Sept. 18. August's consumer and producer price index reports are slated for release Wednesday and Thursday morning, respectively. Traders see it as a certainty the Fed will cut by at least a quarter point.
Monday's rally comes after the stock market suffered serious losses to kick off its first trading week of September, which is historically a tough month for equities. These declines came as the August jobs report stoked fears of a slowing labor market. The S&P 500 averages a 0.7% decline in September, the worst track record of any month, according to the Stock Trader's Almanac.
Palantir and Dell Technologies popped 14% and 3.8%, respectively, after S&P Dow Jones Indices said late Friday the stocks will join the S&P 500.
Correction: Last week, the S&P 500 posted its worst week since March 2023. An earlier version misstated the year.
