Wall Street Holds Near Records Ahead of Fed Decision/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Wall Street traded near record highs Monday, with investors watching earnings from major U.S. retailers and a critical speech by Fed Chair Jerome Powell. Retail giants Walmart, Target, and Home Depot headline the week’s earnings slate. Global markets were mixed as geopolitical tensions and interest rate expectations weighed on sentiment.
Wall Street Market Trends Quick Looks
- U.S. indexes hold steady: S&P 500 flat, Dow unchanged, Nasdaq slightly higher.
- Stock winners: Novo Nordisk surged 5.3% on Wegovy expansion; Soho House jumped 16.2% after buyout deal.
- Retail earnings ahead: Home Depot, Target, Walmart to report this week.
- AI boom drives market: Concentration of gains among a few tech leaders raises risks.
- Powell’s Jackson Hole speech Friday: Investors expect signals on rate cuts in September.
- Treasury yields dip: 10-year note yield slipped to 4.31%.
- Global markets mixed: Europe dipped post-Putin-Trump summit; Asia split between Nikkei gains and Kospi losses.
Wall Street Holds Near Records Ahead of Fed Decision
Deep Look
Wall Street hovered close to record highs on Monday, with investors treading cautiously ahead of a pivotal week featuring major U.S. retail earnings and a closely watched policy update from Federal Reserve Chair Jerome Powell. The S&P 500 was flat in morning trading after three consecutive record-setting sessions last week. The Dow Jones Industrial Average also showed little movement, while the Nasdaq composite managed a modest 0.1% increase.
The stability follows a sharp rally in U.S. equities driven by optimism in artificial intelligence spending and expectations of lower interest rates later this year. Yet analysts warn the rally’s narrow base — heavily concentrated in a small number of mega-cap tech firms — could leave the broader market exposed if economic conditions worsen.
Big Movers: Novo Nordisk and Soho House
Pharmaceutical giant Novo Nordisk saw its U.S.-traded shares surge 5.3% after the Food and Drug Administration approved its blockbuster weight-loss drug Wegovy for treatment of liver disease tied to obesity. The expanded approval is expected to further cement the drug’s dominance in a booming sector of obesity care.
Meanwhile, Soho House, the private members’ club operator with venues worldwide, jumped 16.2% following news that an investor group led by hotel operator MCR would purchase its shares at $9 in cash, representing a hefty premium for investors.
Retail Earnings Take Center Stage
This week, some of the nation’s most influential retailers report earnings, providing a snapshot of U.S. consumer strength amid sticky inflation and slowing job growth. Home Depot reports Tuesday, with shares slipping 0.7% ahead of results. Target, due Wednesday, climbed 1.7%, while Walmart added 0.2% ahead of its Thursday release.
Investors will scrutinize results from these companies, along with Estee Lauder and Ross Stores, to gauge whether middle- and lower-income households are feeling the pinch from higher prices and borrowing costs. While wealthier consumers continue to spend on discretionary goods, there are signs of strain among other groups, particularly in home improvement and discount retail sectors.
The AI Effect and Market Concentration
The current bull run in U.S. stocks has been fueled in large part by artificial intelligence enthusiasm, propelling a handful of technology giants to unprecedented valuations. Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, warned that the disparity between the winners and the broader market could create vulnerabilities.
“The risk is investors extrapolating the success of a few to the market as a whole,” she said. “If economic conditions weaken, many companies will not have the same cushion as the tech leaders.”
All Eyes on Jackson Hole
Friday’s annual Jackson Hole Symposium in Wyoming is expected to dominate market sentiment this week. Fed Chair Jerome Powell is set to deliver remarks, and investors are watching closely for any signal of a potential rate cut in September, which would be the Fed’s first of 2025.
In July, Powell had indicated caution in cutting rates too soon, citing concerns that President Donald Trump’s tariffs could reignite inflation. But recent data showing a weaker-than-expected jobs report may have shifted the balance of risks toward supporting growth.
The Fed faces a dual mandate: maintain employment stability while controlling inflation. Lower rates can fuel consumer and business spending but also risk reversing progress on price stability. Traders remain convinced the Fed will cut rates in September, with Powell’s speech expected to set the tone for the coming months.
Treasury Yields Signal Caution
The bond market reflected those expectations, with the 10-year Treasury yield falling to 4.31% from 4.33% late Friday. Lower yields typically suggest markets anticipate looser monetary policy, supporting equities in the short term.
Global Market Reactions
In Europe, indexes opened slightly lower in the wake of Trump’s inconclusive Alaska summit with Russian President Vladimir Putin. Trump is set to meet Ukrainian President Volodymyr Zelenskyy and several European leaders later Monday, adding geopolitical uncertainty to global markets.
In Asia, results were mixed: Japan’s Nikkei 225 rose 0.8%, supported by strong tech gains, while South Korea’s Kospi dropped 1.5% on weakness in chip stocks.
Outlook
With stocks perched at record highs, this week could prove pivotal. Strong retail earnings and a dovish Powell message could reinforce momentum, while disappointing data or hawkish rhetoric could trigger a pullback.
“The S&P 500 is priced for perfection,” one strategist noted. “If Powell signals rates will stay higher for longer, investors may reassess valuations quickly.”
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