By CCN Markets: The Dow and broader U.S. stock market rose on Monday, as investors shifted focus to a high-profile central-bank meeting that could lay the groundwork for the first interest rate cut in more than a decade.
All of Wall Street’s major indexes reported gains on Monday, reflecting a positive pre-market for Dow futures. The Dow Jones Industrial Average climbed 48.51 points, or 0.2%, to 26,138.12.
The broad S&P 500 Index of large-cap stocks gained 0.2% to 2,893.20. Six of 11 primary sectors reported gains, led by communication services. The sector rose by more than 1%.
A strong performance in communication stocks propelled the Nasdaq Composite Index sharply higher. The tech-driven average climbed 0.8% to 7,854.99.
The Federal Reserve will kick off its two-day meeting in Washington, D.C. on Tuesday, where officials will deliberate on the path of monetary policy. Officials are not expected to cut interest rates at the conclusion of the two-day meeting on Wednesday but could provide tangible clues about whether they plan on doing so next month.
Traders are nearly unanimous in their view that a 25 basis-point reduction is in the cards next month. Fed Fund futures prices currently imply a nearly 86% chance of a reduction following the July 30-31 Federal Open Market Committee (FOMC) meeting, according to CME Group.
A rate cut, the first since the 2008 financial crisis, would mark a significant departure for a central bank that has led the world in policy normalization for going on five years. Fed Chair Jerome Powell conceded earlier this month that the Fed could shift course if U.S.-China trade tensions continue to threaten global economic health.
Talks between the two superpowers have been at a virtual standstill for more than a month after China reportedly backed out of a trade agreement. Presidents Trump and Xi Jinping were scheduled to meet on the sidelines of the upcoming G20 summit in Osaka, Japan. However, Trump recently said “it doesn’t matter” if Xi agrees to the meeting because the U.S. is collecting billions of dollars in tariffs from China.
Last modified: July 2, 2020 7:24 PM UTC