US stocks rebounded on Monday on the heels of the S&P 500’s worst week since early 2023, as inflation came back into focus for investors gauging pressures that could influence the size of interest rate cuts.
The S&P 500 (^GSPC) climbed more than 1%, coming off a hefty weekly loss. The Dow Jones Industrial Average (^DJI) jumped more than 500 points, or 1.4%, while the tech-heavy Nasdaq Composite (^IXIC) rose about 1%.
Industrials, Financials and Consumer Discretionary stocks led the market rebound.
The major averages were on pace to regain some of the ground they lost after the August jobs report failed to settle a key question: How aggressively will the Federal Reserve lower interest rates? The neither-hot-nor-cold data left Wall Street guessing whether a cut of 25 or 50 basis points is likely at this month’s policy meeting.
Read more: Fed predictions for 2024: What experts say about the possibility of a rate cut
At the same time, comments by Fed officials appeared to tilt the market in favor of a 0.25% cut by suggesting that incoming data would have to support the need for larger and further easing.
Focus is now on a fresh consumer inflation print due Wednesday to provide clues to the path of rates. The reading on price pressures will be followed by a producer inflation report on Thursday, the last inflation inputs before the Fed’s policy decision on Sept. 18.
The corporate highlight of the week is Apple’s (AAPL) annual iPhone event, which kicks off on Monday. Apple is expected to launch its iPhone 16 line and provide an update on Apple Intelligence AI features, both closely watched as the likes of Huawei challenge the “Magnificent Seven” tech megacap in the market.
Live6 updates
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Redfin CEO: Mortgage rates may not be a guarantee to drop from here
All signs are pointing to the Federal Reserve cutting interest rates this month, but there’s no guarantee that mortgage rates will drop even further, according to Redfin’s (RDFN) CEO.
“There’s a consumer perception that when the Fed lowers rates, mortgage interest rates will drop further, but mortgages have already priced in at least a quarter point cut,” Redfin CEO Glenn Kelman told Yahoo Finance.
“And if that is all that we get, we might actually see mortgage rates increase, whereas if we get a 50 basis point cut rates will drop further,” the executive added.
Mortgage rates have been declining since May. The average rate on the 30-year fixed-rate mortgage remained steady last week at 6.35%, Freddie Mac reported. That’s significantly lower than the 7% rate last year.
But the big question for the central bank is whether a modest interest rate cut will be enough to maintain economic growth. The Fed doesn’t set mortgage rates but its policy moves influence the direction of where rates will go.
Still, consumers remain optimistic about the future direction of mortgage rates despite homebuying sentiment remaining sluggish. Fannie Mae’s national housing survey in August found that 39% of consumers expect mortgage rates to decline in the next 12 months, higher than 29% reported in the prior month.
“People are still waiting to see what the Fed is going to do,” Kelman said.
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Citi CFO eyes Tuesday talk for latest on Basel III Endgame capital proposal
Yahoo Finance’s David Hollerith reports:
During a fireside chat with analysts on Monday morning at a conference hosted by Barclays, Citigroup’s CFO Mark Mason weighed in on the bank capital proposal Basel III Endgame.
He was asked about whether Citi plans to return more capital to shareholders in the upcoming quarter given the uncertainty around the new capital requirements. Mason indicated Citi will know more in the coming days.
“I think we’ll all know a little bit more tomorrow when [Michael] Barr speaks. I’m glad that there’s been a re-look, if you will, at the proposal. It sounds like we’ll know even more in a week or so, when perhaps a document actually comes out and we’re able to assess that,” said Mason.
By tomorrow, the executive is referring to a public talk Tuesday morning hosted by the Brookings Institution in Washington where the Fed’s Vice Chair for Supervision Michael Barr is expected to address the changes.
First unveiled in July 2023, Basel III Endgame is a set of strict bank capital requirement rules aimed at ensuring financial institutions can weather loan losses in the event of rough economic times.
Last year’s initial proposal received immediate pushback from the banking industry and its lobbyists in Washington, who even threatened to sue if the original proposal was not changed before becoming final.
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Trump vs. Harris: The economic topics to watch during tomorrow’s debate
Yahoo Finance’s Ben Werschkul repots:
On Tuesday night, Kamala Harris and Donald Trump will meet for the first time — literally, as they’ve never met in person before — for a high-stakes debate in Philadelphia with economic issues likely to be front and center.
What is well known is how each side is likely to attack the other on fiscal issues. How they respond is where it could get interesting.
Former President Trump is highly likely to once again charge that Harris is a communist, echoing a favorite and baseless line in recent weeks that he’s running against “Comrade Kamala.” Vice President Harris is sure to shoot back with charges that Trump’s plan could tip the country into a recession and send prices through the roof via his tariffs plans.
Both candidates could be flustered by directly wrestling with these charges, as they’ve often campaigned recently in scripted campaign appearances, speeches, or interviews with friendly interlocutors.
Read more here.
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Nasdaq rebounds 1% as Nvidia shares gain
Nvidia (NVDA) shares gained more than 2% on Monday, helping lift the Nasdaq. The tech heavy index rose as much as 1.2% to lead the market gains.
Nvidia stock rebounded after losing almost 14% last week. The AI chip heavyweight has underpinned the market rally this year.
EV giant Tesla (TSLA) also rebounded as much as 4% on Monday following a pullback on Friday.
The Nasdaq led the market rebound on Monday -
Greetings from San Francisco
Hello from the Goldman Sachs Tech + Media conference in San Francisco!
The Yahoo Finance team is live today and tomorrow with some very big interviews, kicking off this morning with Goldman’s chief economist Jan Hatzius and later on with AMD (AMD) CEO Dr. Lisa Su.
This conference comes at an interesting time in markets, when investors are looking for reasons to sell high beta AI plays such as Nvidia (NVDA).
For me, I will be aiming to ascertain whether these sell-offs are overdone based on executives’ comments on demand trends. When I talked with Dell (DELL) founder and CEO Michael Dell last week, I didn’t get the sense demand was softening very much if at all.
Some more of those upbeat vibes at this market-moving conference may be rather helpful in getting the tech trade back on stable footing.
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Stocks rebound following worst week of the year
Stocks rebounded on Monday on the heels of the S&P 500’s worst week since early 2023 as investors gauged the size of interest rate cuts the Federal Reserve could implement later this month.
The S&P 500 (^GSPC) rose 0.7% following a drop of 1.7% for the benchmark on Friday. The Dow Jones Industrial Average (^DJI) jumped 0.6%, while the tech-heavy Nasdaq Composite (^IXIC) increased roughly 0.9%.
The major averages are coming off a steep sell-off during September’s first week of trading where semiconductor stocks led the declines.
Nvidia (NVDA), which fell 4% on Friday, opened nearly 2% higher on Monday as chip stocks advanced.
Investors are paying close attention to Apple’s (AAPL) annual iPhone event, which kicks off on Monday.
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