Major US Stock Indexes: Monday's Performance Amidst Fed Rate Cut

On Monday, September 23, 2024, major US stock indexes traded near record highs, reflecting a positive market sentiment following the Federal Reserve's interest rate cut. The S&P 500 index was up 0.2% in afternoon trading, hovering around its all-time high set on Thursday. The Dow Jones Industrial Average rose 0.2%, maintaining its record set on Friday, while the Nasdaq composite also gained 0.2%.

The rate cut by the Federal Reserve last week, the first in over four years, boosted investor confidence. The hope is that lower interest rates will stimulate the US economy, helping to avoid a recession. However, some critics argue that the Fed may be acting too late, with the job market already showing signs of slowing down.

A report released on Monday indicated that US business activity is not growing as quickly as expected, with manufacturing activity experiencing a downturn. The preliminary report from S&P Global suggested that US manufacturing shrank more severely in September compared to August, reaching a 15-month low. Despite this, the overall figures still suggest a healthy rate of economic growth.

Several sectors and individual stocks contributed significantly to the overall performance of the major US stock indexes on Monday. Tesla led the way with a gain of 4.6%, clawing back all its sharp losses from earlier in the year. The maker of electric vehicles has seen its stock price recover from a low of -42% in April, when it was cutting prices on its cars to stimulate sales.

In international markets, indexes held mostly steady in Europe after preliminary data suggested business activity in the euro zone was weaker than expected. In Asia, movements for indexes were also muted, with the Shanghai Composite Index rising 0.4% and the Hang Seng Index in Hong Kong slipping 0.1% after China's central bank lowered its 14-day reverse repurchase rate on Monday.

As the week progresses, investors will be closely watching several economic reports that could provide more context about the US economy's health. These include the final reading for the US economy's growth in the spring, due out on Thursday, and a look at US consumer spending on Friday. Such reports, particularly those related to the job market, will take top priority on Wall Street as the main fear now is a slowdown in the job market.