Stocks closed higher on Monday in a volatile trading session ahead of the Federal Reserve’s two-day policy meeting slated to kick off Tuesday.
The Dow Jones Industrial Average jumped 197.26 points, or 0.64%, to close at 31,019.68. The S&P 500 gained 0.69% to 3,899.89, and the Nasdaq Composite added 0.76% to end at 11,535.02.
Stock wavered between gains and losses throughout the session, with the 30-stock index down as much as 263 points earlier in the day. At session lows, the S&P 500 and Nasdaq shed more than 0.9% each.
Yields pushed higher ahead of the Fed’s likely decision to raise its benchmark rate by another 75 basis points to snuff out inflation later this week. The 10-year Treasury yield topped 3.51% and hit its highest level in 11 years.
After some brief hope over the summer that the Fed may be done with its aggressive tightening campaign, investors have been dumping stocks again on fears the central bank will go too far and tip the economy into a recession.
Investors are focused on the Fed’s policy meeting slated to begin Tuesday, where the central bank is expected to raise interest rates by another 75 basis points. Investors are also watching for guidance about corporate earnings before the next reporting season begins in October.
“We’re in a wait-and-see approach and markets are waiting for some kind of bullish or bearish catalyst to send us out of this trading range,” said Adam Sarhan, CEO of 50 Park Investments. “The markets are struggling for direction and that’s the fundamental news.”
Nine out of the 11 S&P 500 sectors ended the day positive, led to the upside by materials, consumer discretionary and industrials. Financials also rose as some investors bet that higher rates could benefit their bottom lines. Health care was the laggard, falling after comments from President Joe Biden indicated the pandemic is over.
Stocks slid last week as investors reacted to a hotter-than-expected inflation report and a dismal warning from FedEx about a “significantly worsened” global economy. The major averages posted their fourth weekly loss in five weeks.
A few economic data releases on deck this week beyond the key Fed meeting, including August housing starts on Tuesday and initial jobless claims on Thursday.
Source: Dow Closes Nearly 200 Points Higher, Stocks Snap Two-Day Losing Streak to Start Big Fed Week.
