The Dow Jones index closed higher by more than 510 points, starting a busy week for the US economy

The Dow Jones index closed higher by more than 510 points, starting a busy week for the US economy

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People walk near the New York Stock Exchange (NYSE) on Wall Street in New York City, on October 26, 2023.

New York

Stocks rose on Monday as investors looked ahead to the Federal Reserve’s upcoming meeting and the slate of economic and corporate news scheduled for release this week.

The Dow Jones index jumped 511 points, or 1.6%. The S&P 500 rose 1.2%, and the Nasdaq Composite rose 1.2%.

The S&P 500 index closed last week in correction territory, or more than 10% from its last peak in July, after a series of mixed earnings from big tech heavyweights sent stocks lower, and strong economic data raised concerns that the economy is not… like that. Sufficient calming of interest rate hikes by the Fed.

The Federal Reserve unveils its next interest rate decision on Wednesday. Traders appear confident that the Federal Reserve will pause interest rates at its next meeting, but will be looking for clues about the direction the central bank will take from there.

Chairman Jerome Powell had previously indicated that rising bond yields could mean the end of the rallies, but he did not rule additional hikes off the table.

On the same day, the Treasury issues its quarterly recovery statement outlining its borrowing needs and the steps it plans to meet over the next three months.

The Treasury Department said on Monday that it expects to borrow $776 billion during the fourth quarter of this year, $76 billion less than estimates announced in July. This is the largest amount ever borrowed by the government during the fourth quarter. The Treasury also said it expects to borrow $816 billion during the first quarter of next year.

Corporate profits are also at the forefront of Wall Street’s minds. Apple shares rose 1.2% on Monday ahead of its quarterly results due after Thursday’s close, which will be closely watched after the carnage in technology stocks last week.

Shares of other major technology companies also rose on Monday. Alphabet shares rose 1.9%, Meta Platforms shares increased 2%, Microsoft gained 2.3%, and Amazon shares increased 3.9%.

McDonald’s shares also rose 1.7% on Monday after the fast food chain beat top and bottom line expectations.

Other notable companies reporting results this week include Anheuser-Busch, Stellantis, CVS, Kraft Heinz, Pfizer, Eli Lilly, and Starbucks.

Investors are looking to the October jobs report due on Friday for clues about the final interest rate decision the Federal Reserve will make for the year. The labor market remained hot in September, adding 336,000 jobs in its biggest monthly gain since January, raising concerns that the central bank has more room to raise interest rates.

“The number of jobs is likely to have a material impact on long-term bond yields,” said Tom Graf, head of investments at Facet. “We could see a very significant uptick if the jobs numbers come out weak.”

The yield on the 10-year Treasury note, which rose above 5% last week, remained below that level on Monday at 4.88%.

Traders largely expect the Fed will not raise interest rates for the rest of the year, according to the CME FedWatch tool.

With a full trading day remaining for the month, all three major indices are on track to end October lower.

As stocks stabilize after the trading day, levels may change slightly.

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