US Stocks: Wall St rallies as rate cut hopes outweigh Middle East turmoil

Zawya

5 hours ago

NEW YORK: Wall Street gained ground on Monday as the prospect of the U.S. Federal Reserve cutting interest rates as early as July offset fears that Iran would retaliate against U.S. airstrikes and further escalate the war in the Middle East.
A broad rally pushed all three major U.S. stock indexes modestly higher. Consumer discretionary stocks led the gainers, with a solid boost from Tesla.
"The rally is a bit surprising," said Jay Hatfield, CEO and portfolio manager at InfraCap in New York. "In a way the U.S. attack puts an end to the uncertainty of whether the U.S. is going to attack."
"The market action is extremely bullish because this is the time frame in June when we're supposed to have a pullback," Hatfield added. "People do not want to sell in this market."
Federal Reserve Vice Chair Michelle Bowman said on Monday that "it is time to consider adjusting the policy rate," as risks to the job market outweigh inflationary concerns related to tariffs. Federal Reserve Bank of Chicago president Austan Goolsbee said that thus far, tariffs have had a more modest economic impact than expected.
Financial markets are pricing in at least two 25-basis-point rate cuts before year-end. The first cut is widely expected to happen in September.
Tesla shares surged after the long-awaited launch of the company's robotaxi service in Austin, Texas. The electric vehicle maker's shares were last up 9.4%.
Israel continued to bombard Iran the day after the U.S. joined the war.
Still,
oil prices tumbled after Iran's retaliation did not include action to disrupt oil and gas tanker traffic through the Strait of Hormuz. Tehran had warned it would close the Strait of Hormuz, a crucial oil shipping route.
On the economics front, S&P Global's advance "flash" purchasing managers' indexes (PMI) showed the U.S. economy is expanding at a slightly more robust pace than analysts anticipated. A separate report showed new home sales, while under pressure from elevated borrowing costs, posted an unexpected gain in May.
Later in the week, the Commerce Department's final take on first-quarter GDP and its Personal Consumption Expenditures (PCE) and Fed Chair Jerome Powell's congressional testimony are likely to be parsed for clues regarding the near-term path of monetary policy.
The Dow Jones Industrial Average rose 305.71 points, or 0.72%, to 42,512.53, the S&P 500 gained 44.70 points, or 0.75%, to 6,012.54 and the Nasdaq Composite gained 177.08 points, or 0.91%, to 19,624.49.
Among the 11 major sectors of the S&P 500, consumer discretionary stocks led the gainers, while energy was the only sector in negative territory.
Among other movers, drugmaker Eli Lilly rose 0.9% after detailed trial data on rival Novo Nordisk's experimental obesity drug CagriSema failed to impress investors. Novo Nordisk's shares dipped 5.3%.
Fiserv's shares rose nearly 3.3% following its announcement that it would launch a new digital asset platform.
Northern Trust jumped 7.2% after a Wall Street Journal report said Bank of New York Mellon broached the topic of a potential merger.
AI-server-maker Super Micro Computer dropped 6.8% after it announced a private offering of $2 billion five-year convertible bonds.
Quarterly results from sportswear company Nike and package delivery firm FedEx are expected later in the week.
Advancing issues outnumbered decliners by a 1.67-to-1 ratio on the NYSE. There were 100 new highs and 66 new lows on the NYSE.
On the Nasdaq, 2,389 stocks rose and 2,026 fell as advancing issues outnumbered decliners by a 1.18-to-1 ratio. The S&P 500 posted 12 new 52-week highs and 4 new lows while the Nasdaq Composite recorded 77 new highs and 105 new lows.
(Reporting by Stephen Culp; Additional reporting by Kanchana Chakravarty and Nikhil Sharma in Bengaluru; Editing by David Gregorio)