Wall Street stocks have closed higher, extending Friday's rally as increased odds the US Federal Reserve will lower its Fed funds target rate in December helped investors look past concerns about inflated tech valuations.
US indexes embarked on the holiday-shortened week with solid gains on Monday, with strength in the "Magnificent Seven" group of artificial-intelligence-related stocks putting the tech-heavy Nasdaq out front.
According to preliminary data, the S&P 500 gained 101.11 points, or 1.53 per cent, to end at 6,705.69 points, while the Nasdaq Composite gained 597.01 points, or 2.68 per cent, to 22,870.09. The Dow Jones Industrial Average rose 195.44 points, or 0.42 per cent, to 46,440.85.
Fresh US economic data
A spate of economic reports, belatedly released after the recent six-week government shutdown, hinted at labour market weakness and stubbornly elevated inflation, which has bolstered investor optimism the Fed will implement its third and final interest rate cut of 2025 at the conclusion of its December monetary meeting.
Commentary from Fed Governor Christopher Waller, New York Fed President John Williams, and San Francisco Fed President Mary Daly lent some support to that optimism, although other policymakers voiced dissenting opinions.
Financial markets are pricing in an 85 per cent likelihood of that occurring, up from 42.4 per cent a week ago, according to CME's FedWatch tool.
The release of economic data is set to continue this week, with retail sales, producer prices, and new orders for durable goods joining independent indicators such as Case-Shiller home prices, the Conference Board's consumer confidence report and the National Association of Realtors' pending home sales data.
Consumer spending in the spotlight
The US holiday shopping season kicks off this week, starting with Thursday's Thanksgiving holiday. The health of the consumer, who shoulders about 70 per cent of the US economy, will be assessed for any signs of weakness amid increased layoff announcements and weak survey reports. Even so, the National Retail Federation expects holiday sales to top $US1 trillion for the first time.
