People pass the entrance for the Wall Street subway station on Sept. 2, 2024, in New York. (AP Photo/Peter Morgan/The Canadian Press file)
U.S. stock indexes closed higher on Wall Street, extending their record-breaking momentum. On Monday, the S&P 500 gained 0.8%, following a record set the previous Friday. The Dow Jones Industrial Average recovered from an early dip to rise 0.5%, adding to its own all-time high. The Nasdaq composite also saw a solid increase, climbing 0.9%. This positive trend came after a relatively quiet trading session in Europe, and the U.S. bond market was closed for a holiday.
In China, the finance minister's update on Saturday stirred mixed reactions among investors. Lan Fo’an discussed potential strategies to boost the economy but did not announce any major stimulus measures that many had anticipated. This led to fluctuations in Chinese stocks; while Shanghai’s index surged by 2.1%, Hong Kong's Hang Seng fell by 0.7%. Concerns over reduced demand from China’s slowing economy contributed to a nearly 2% drop in crude oil prices.
Analysts have recently been hopeful about stimulus efforts in China, which had previously lifted Chinese stocks from their years-long slump. However, skepticism remains about the government's ability to rejuvenate the economy significantly. Morgan Stanley Wealth Management's chief investment officer, Lisa Shalett, noted that while the measures are welcome, they may not be enough to initiate a new growth cycle.
Commodities like copper also saw price declines, reflecting concerns about demand from China. This negatively impacted mining companies, with Freeport-McMoRan down 2.8%, one of the largest losses in the S&P 500.
Boeing faced challenges, dropping 1.4% after announcing a projected cash burn of $1.3 billion and a loss of $9.97 per share for the last quarter. The company also revealed plans to lay off 10% of its workforce amid a strike affecting its production.
On a brighter note, SoFi Technologies surged 10.3% after announcing a $2 billion loan agreement with Fortress Investment Group. Longboard Pharmaceuticals soared 51.2% following an all-cash acquisition deal valued at $2.6 billion with H. Lundbeck.
Looking ahead, the week promises few major economic reports, with attention shifting to corporate earnings. Key reports from Bank of America, Johnson & Johnson, and UnitedHealth Group are due on Tuesday, with more from United Airlines, Netflix, American Express, and Procter & Gamble later in the week. Analysts expect S&P 500 companies to report a 4.1% growth in earnings per share compared to last year, marking a fifth consecutive quarter of growth. This consistent profit growth could help ease concerns over the high valuations in the stock market, as investors remain optimistic about the Federal Reserve's approach to managing interest rates and the economy's overall strength.
