The S&P 500 rose 0.8%. The Dow Jones Industrial Average was up 210 points, or 0.4%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 1.3% higher. All are adding to their latest all-time highs set on Friday.
Stocks also rallied in Asia ahead of a meeting on Thursday between the heads of the United States and China. The hope is that the talks could clear rising tensions between the world’s two largest economies and allow the global economy to keep motoring.
U.S. Treasury Secretary Scott Bessent said there’s “a framework” for U.S. President Donald Trump and Chinese leader Xi Jinping to discuss at their meeting, while Trump said, “We feel good” about working things out with China.
That’s just one of many things that will need to go right this week in order for the U.S. stock market’s tremendous, record-breaking rally to continue. The S&P 500 has shot up a stunning 37% since hitting a low in April, when worries about Trump’s tariffs on China and other countries were at their peak. Besides hopes for easing trade tensions, the rally has also been built on expectations for several more things to happen.
One is that the Federal Reserve will keep cutting interest rates in order to give the slowing job market a boost. The Fed’s next announcement on interest rates is due on Wednesday, and the nearly unanimous expectation among traders is that it will cut the federal funds rate by a quarter of a percentage point for a second straight meeting.
It’s not a certainty though, because the Fed has also warned it may have to change course if inflation ends up accelerating beyond its still-high level. That’s because low interest rates can make inflation worse.
The latest monthly report on inflation came in slightly better than economists expected, raising hopes, but it may be the final update for a while if the U.S. government’s shutdown continues. That could cloud the forecast for cuts to rates to continue.
Besides low interest rates, another expectation that’s propped up stock prices is the forecasts that U.S. companies will continue to deliver solid growth in profits.
Keurig Dr Pepper climbed 4.9% Monday after reporting profit for the latest quarter that matched analysts’ expectations. The company behind the Canada Dry and Green Mountain coffee brands said it benefited from higher prices for K-Cup products, among other things
Some of Wall Street’s most influential stocks are also set to report their latest results this upcoming week, including Alphabet, Meta Platforms and Microsoft on Wednesday, and Amazon and Apple on Thursday. They’ll need to deliver big growth and justify big spending that’s underway in artificial-intelligence technology.
Worries have been climbing that AI may be in the midst of a bubble, similar to the dot-com bonanza that ended up bursting in 2000.
In stock markets abroad, indexes were mixed in Europe amid mostly modest moves following bigger gains in Asia.
Stocks rose 1.2% in Shanghai and 1% in Hong Kong. They rose even more in Tokyo, where the Nikkei 25 jumped 2.5%, and in Seoul, where South Korea’s Kospi rallied 2.6%.
In the bond market, the yield on the 10-year Treasury was holding steady at 4.02%, where it was late Friday.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
