Stocks moved higher Monday as Fed rate cut expectations fueled optimism across Wall Street, with major indexes edging closer to record levels. Investors are now watching a crucial week of economic reports that could determine whether the Federal Reserve will lower interest rates at its upcoming meeting.
Stocks Edge Toward Records
The S&P 500 rose 0.3% in early trading, just shy of its record set last week. The Dow Jones Industrial Average gained 11 points, or less than 0.1%, while the Nasdaq Composite jumped 0.6%.
Investor attention turned to AppLovin (NASDAQ:APP) and Robinhood Markets (NASDAQ:HOOD), which will soon join the S&P 500 index along with Emcor Group (NYSE:EME). Their inclusion sparked gains of 10.8%, 11.9%, and 0.4%, respectively. Because many funds track the S&P 500, new additions often attract inflows from institutional investors.
Meanwhile, MarketAxess Holdings (NASDAQ:MKTX), Caesars Entertainment (NASDAQ:CZR), and Enphase Energy (NASDAQ:ENPH) slipped as they prepare to be demoted to the SmallCap 600 index.
EchoStar and SpaceX Deal
One of the biggest movers of the day was EchoStar (NASDAQ:SATS), which surged 20.5% after agreeing to sell spectrum licenses to Elon Musk’s private space company SpaceX for $17 billion in cash and stock. As part of the deal, SpaceX will also cover $2 billion of EchoStar’s debt interest payments through 2027.
The agreement underscores the growing intersection between satellite operators and Musk’s expanding space empire, further strengthening sentiment around space-linked equities.
Fed Rate Cut Expectations in Focus
Despite individual stock moves, overall market activity was relatively calm. Investors are awaiting a wave of reports this week that could influence Fed rate cut expectations.
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Jobs data: On Tuesday, the U.S. government will release revisions to hiring numbers through March, which may show weaker-than-expected job growth.
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Inflation reports: Wednesday and Thursday will bring updates on wholesale and consumer price inflation, key indicators for the Fed.
Currently, traders broadly expect the Fed to cut rates for the first time this year at its meeting next week. Lower rates typically benefit stocks by reducing borrowing costs and stimulating spending. However, cuts can also risk reigniting inflation, creating a balancing act for policymakers.
So far, Fed officials have expressed concern that former President Donald Trump’s tariff policies could keep inflation elevated. But slowing job growth may be pushing the central bank to reconsider.
Treasury Yields Ease
In the bond market, Treasury yields slipped as expectations for rate cuts strengthened. The yield on the 10-year Treasury dropped to 4.05%, down from 4.10% late Friday and 4.28% the prior week. Lower yields reflect investor anticipation that the Fed will soon adopt a more accommodative stance.
Global Markets React
Internationally, markets followed Wall Street’s lead. Major indexes in Europe and Asia climbed, with Japan’s Nikkei 225 advancing 1.5%. The rally came after Prime Minister Shigeru Ishiba announced his resignation, a move long expected by analysts.
Japan’s economy also showed unexpected strength. Revised data indicated a 2.2% annualized growth rate for the first fiscal quarter, well above the earlier 1.0% estimate, fueled by resilient consumer spending and inventories.
Bottom Line
With the S&P 500 and Nasdaq hovering near record highs, Fed rate cut expectations are the key driver for markets this week. Stronger-than-expected inflation could delay cuts, while weaker jobs data may cement them. For investors, the coming days could set the tone for the remainder of 2025, as Wall Street awaits the Fed’s next move.
Ultimately, investors should prepare for volatility as new data emerges. Whether the Fed cuts aggressively or remains cautious, the outcome will ripple across equities, bonds, and global markets. Positioning portfolios for resilience and growth under shifting economic conditions will be critical as Fed rate cut expectations dominate investor sentiment.
Featured Image – Freepik
