The Wall Street rally gained momentum Monday as U.S. stocks edged closer to record territory, fueled by optimism around Federal Reserve policy and a surge in Tesla (NASDAQ:TSLA). Investors are watching closely to see whether the recent climb is justified or if markets have overheated ahead of key economic announcements.
The S&P 500 rose 0.5%, heading toward another all-time high after last week’s record close. The Dow Jones Industrial Average edged up by 59 points, or 0.1%, while the Nasdaq composite gained 0.8%, setting its own fresh peak.
Tesla Fuels the Wall Street Rally
Leading the charge was Tesla (NASDAQ:TSLA), which jumped 6.4% after CEO Elon Musk purchased roughly $1 billion worth of stock through a trust. The move was seen by traders as a signal of Musk’s confidence in the company, even after Tesla’s modest losses earlier this year. The electric vehicle giant’s rebound was strong enough to overshadow headwinds elsewhere in the market.
Meanwhile, Nvidia (NASDAQ:NVDA) slipped 1.1% following news that Chinese regulators accused the chipmaker of violating antimonopoly laws. While no penalties were announced, Beijing indicated further investigation is underway, keeping some investors cautious.
Fed Decision Could Drive or Derail Rally
The centerpiece of the week will be the Federal Reserve’s interest rate decision on Wednesday. Analysts widely expect the central bank to deliver its first rate cut of the year, a move aimed at reviving a slowing job market. The Wall Street rally has largely been built on this assumption, with investors pricing in multiple cuts through 2025 and into 2026.
However, expectations bring risks. If the Fed signals fewer or smaller cuts than markets anticipate, stock prices could face a sharp pullback. Fed Chair Jerome Powell’s press conference and updated economic projections are likely to be more impactful than the rate cut itself.
Inflation and Politics Remain Pressures
Inflation continues to complicate the Fed’s path. President Donald Trump’s tariffs risk reigniting price pressures, making it harder for policymakers to hit their 2% inflation target. At the same time, Trump has been publicly pressuring Powell for deeper and faster rate cuts, even calling for the removal of a Fed governor. His criticism adds political noise to an already delicate balancing act for central bankers.
Stock Movers Beyond Tesla
Other big movers shaped Monday’s trading session.
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TKO Group (NYSE:TKO) rose 4% after announcing $1 billion in stock buybacks, rewarding shareholders directly.
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Intel (NASDAQ:INTC) gained 4.2% after cutting expense forecasts and completing the sale of a 51% stake in its Altera unit to Silver Lake.
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Hain Celestial (NASDAQ:HAIN) plunged 24.7% after posting a steeper quarterly loss, with its interim CEO pledging restructuring moves to stabilize sales.
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Alaska Air Group (NYSE:ALK) lost 3.5% as higher fuel and labor costs pressured third-quarter guidance, even as demand for premium seats remained solid.
Bonds, Global Markets, and Economic Data
Treasury yields slipped on expectations of Fed rate cuts, with the 10-year yield easing to 4.03% from 4.06%. Global markets followed the Wall Street rally with mixed results: France’s CAC 40 rose 1%, while other European and Asian indexes posted smaller gains.
The next major economic update arrives Tuesday with U.S. retail sales data, offering another clue about consumer spending trends.
Outlook: Can the Wall Street Rally Last?
For now, the Wall Street rally shows resilience, powered by Tesla’s surge and hopes of Fed policy support. Still, risks remain—from sticky inflation and political interference to global regulatory scrutiny on tech giants. If Powell delivers clarity and confidence on the Fed’s path forward, markets may keep climbing. If not, Wall Street could quickly reverse course.
Featured Image – Freepik
