Nasdaq Rises on Growth Stock Gains as Investors Await Fed Commentary

The Nasdaq experienced a rise on Monday, driven by gains in growth stocks, as investors eagerly awaited commentary from Federal Reserve officials and upcoming economic data to gain insights into the central bank’s interest-rate path.

Nvidia saw a significant jump of 2.8% after Goldman Sachs added the chipmaker’s stock to its conviction list. Tesla also rebounded, gaining 0.5% after initially falling 3% due to missing market estimates for third-quarter deliveries. Other megacap stocks such as Apple, Meta Platforms, Amazon.com, Alphabet, and Microsoft also advanced between 0.9% and 1.9%.

While eight of the eleven S&P subsectors experienced declines, the utilities index, often considered a bond proxy, saw a decline of 4.9%. Federal Reserve Chair Jerome Powell, during a community roundtable discussion, refrained from commenting on current monetary policy or the economic outlook. However, Fed Governor Michelle Bowman expressed her willingness to support another increase in the central bank’s policy interest rate if incoming data indicates a slowdown or insufficient progress on inflation. Cleveland Fed President Loretta Mester is also scheduled to speak later in the day.

The positive sentiment in the market was partly driven by U.S. manufacturing showing signs of recovery in September, with increased production and rebounding employment. However, the outlook remains cautious, given the softness of global conditions, according to Paul Ashworth, chief North America economist at Capital Economics.

Investors will closely monitor labor market data leading up to the crucial monthly jobs report at the end of the week for further indications of the Fed’s interest-rate path. Additionally, the passing of a stopgap funding bill by Congress, with overwhelming Democratic support, was well-received by the markets.

As of midday, the Dow Jones Industrial Average was down 0.56%, the S&P 500 was down 0.34%, and the Nasdaq Composite was up 0.36%. Viatris, a drugmaker, experienced a 3.1% increase after announcing agreements to divest some of its businesses for up to $3.6 billion.

In summary, the Nasdaq’s rise was fueled by gains in growth stocks, while investors eagerly awaited insights from Federal Reserve officials and upcoming economic data. The market remained cautious, with a focus on the Fed’s interest-rate path and labor market indicators.