Stocks rise as US economy remains 'healthy': Market Report

U.S. stocks rose and Treasuries fell after data showed U.S. business activity was strong even as growth slowed, boosting confidence that the world's largest economy can achieve a soft landing.

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The S&P 500 rose 0.4%, trading in a narrow range after manufacturing data and comments from Federal Reserve officials on Monday. Among individual stocks that moved, Intel Corp. rose 3.3% after Apollo Global Management Inc. said it had offered to make a multibillion-dollar investment in the chipmaker. Constellation Energy Corp. led energy companies higher after its deal with Microsoft Corp. was well received by analysts.

U.S. business activity expanded at a slightly slower pace in early September, while expectations deteriorated and a price index rose to a six-month high, data showed on Monday. Investors are looking for fresh signals on the scope of further easing after the Federal Reserve cut interest rates by a half percentage point last week.

“This report is fairly inconclusive, so it shouldn’t change the Fed’s outlook significantly,” says Adam Crisafulli of Vital Knowledge. “The preliminary PMIs suggest the US economy is on a reasonably sound footing, especially compared to Europe.”

Traders were betting on a further three-quarter-point rate cut by the end of the year, a slightly more aggressive path than policymakers have indicated.

Minneapolis Federal Reserve President Neel Kashkari signaled he supports another half-percentage-point rate cut by the end of the year in an op-ed that points to a weak labor market and illustrates his support for the central bank's aggressive rate cut.

Atlanta Federal Reserve President Raphael Boucek said that starting the central bank’s rate-cutting cycle with a big step would help bring rates closer to neutral levels, but officials shouldn’t commit to a rhythm of unexpected moves. Later this week, investors await the Fed’s preferred price gauge and U.S. personal spending data, due Friday.

The US dollar was little changed, while policy-sensitive two-year US Treasury yields rose.

“With the Fed’s first rate cut since 2020 in the history books, many investors may be thinking, ‘What now?’” said Chris Larkin of ETrade at Morgan Stanley. “This will keep the spotlight on economic growth, especially the labor market.”

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In Europe, traders digested worse-than-expected manufacturing data, spurring bets on more aggressive interest rate cuts from the European Central Bank. The euro fell while European stocks rose. Weak PMI data from France and Germany on Monday was followed by figures showing the euro zone’s private sector economy contracted for the first time since March.

The single currency fell by about 0.7% against the dollar.

“The market is almost clamoring for more aggressive rate cuts, especially after what we’ve seen from the Fed,” Maria Wittmann, chief multi-asset strategist at State Street, said on Bloomberg Television. The European Central Bank is “definitely overdue,” she added.

French government bonds fell against their peers after a new French government was formed late Saturday, made up of a mix of conservatives and centrists. Investors are concerned that a government collapse would jeopardize the administration’s ability to pass the budget through parliament in the coming weeks.

The company's most prominent achievements:

Apollo Global Management Inc. has offered to invest billions of dollars in Intel Corp., according to people familiar with the matter, in a move that would be a vote of confidence in the chipmaker’s turnaround strategy.

Brookfield Asset Management has raised an initial $2.4 billion for a fund dedicated to investing in clean energy and transition assets in emerging markets, nearly halfway to its target.

Alex Karp, co-founder and CEO of Palantir Technologies Inc., has a love-hate relationship with Wall Street. He says analysts don’t understand the company and that he prefers Palantir’s loyal army of retail investors.

StandardAero Inc. is seeking to raise $1.1 billion in its initial public offering, after its backer Carlyle Group Inc. decided to pursue a listing of the aircraft maintenance services provider instead of a sale.

BNP Paribas Group has agreed to buy HSBC Holdings Plc's private banking operations in Germany, as the French group seeks a bigger share of the country's growing wealth management market.

UniCredit CEO Andrea Orcel has doubled the bank’s stake in Commerzbank AG, in a dramatic development likely to escalate tensions with the German government.

Elsewhere, Asian markets rose on speculation that China is close to announcing fresh stimulus, following a short-term interest rate cut and a rare economic briefing scheduled for Tuesday.

“The start of the Fed’s easing cycle should lead to more stimulus from China, especially as the 5% growth target looks difficult to achieve,” Mohit Kumar, chief strategist and economist for Europe at Jefferies International Ltd., wrote in a note. “Stimulus measures should also be beneficial for Europe.”

Gold touched a record high earlier before retreating slightly as escalating conflict in the Middle East fueled bets for further gains in the yellow metal’s safe-haven status. U.S. energy stocks also rose.

Main events this week:

• Australia interest rate decision, Tuesday

• Japan's Jibun Bank Manufacturing PMI, Services PMI, Tuesday

• Mexico Consumer Price Index, Tuesday

• Bank of Canada Governor Tiff Macklem speaks Tuesday

• Australian Consumer Price Index, Wednesday

• China's medium-term lending facility rate, Wednesday

• Sweden interest rate decision, Wednesday

• Swiss interest rate decision Thursday

• European Central Bank President Christine Lagarde speaks Thursday

• U.S. Jobless Claims, Durable Goods, Revised GDP, Thursday

• Federal Reserve Chairman Jerome Powell delivers pre-recorded remarks at the 10th Annual U.S. Treasury Market Conference, Thursday.

• Mexico interest rate decision, Thursday

• Tokyo CPI, Friday

• China's industrial profits, Friday

• Eurozone Consumer Confidence, Friday

• U.S. Personal Spending Index, University of Michigan Consumer Confidence Index, Friday

Some key movements in the markets:

Stocks

• The S&P 500 was up 0.2% as of 10:18 a.m. New York time.

• The Nasdaq 100 rose 0.2%.

• The Dow Jones Industrial Average rose 0.1%.

• The Stoxx Europe 600 index rose 0.4%.

• MSCI World Index rose 0.2%

Currencies

• The Bloomberg Dollar Index was little changed.

• The euro fell 0.3% to $1.1130.

• The pound rose 0.2% to $1.3346.

• The Japanese yen fell 0.2% to 144.13 yen per dollar.

Cryptocurrencies

• Bitcoin rose 0.8% to $63,698.66

• Ether price rose 3.7% to $2,668.32

Bonds

• The yield on the 10-year US Treasury note rose five basis points to 3.79%.

• The yield on the 10-year German bond fell by two basis points to 2.19%.

• The yield on the 10-year British bond rose four basis points to 3.94%.

Goods

• West Texas Intermediate crude rose 1% to $71.72 a barrel.

• Spot gold rose 0.4 percent to $2,631.49 an ounce.

This story was produced with the help of Bloomberg Automation.Stocks

• The S&P 500 was up 0.2% as of 10:18 a.m. New York time.

• The Nasdaq 100 rose 0.2%.

• The Dow Jones Industrial Average rose 0.1%.

• The Stoxx Europe 600 index rose 0.4%.

• MSCI World Index rose 0.2%

Currencies

• The Bloomberg Dollar Index was little changed.

• The euro fell 0.3% to $1.1130.

• The pound rose 0.2% to $1.3346.

• The Japanese yen fell 0.2% to 144.13 yen per dollar.

Cryptocurrencies

• Bitcoin rose 0.8% to $63,698.66

• Ether price rose 3.7% to $2,668.32

Bonds

• The yield on the 10-year US Treasury note rose five basis points to 3.79%.

• The yield on the 10-year German bond fell by two basis points to 2.19%.

• The yield on the 10-year British bond rose four basis points to 3.94%.

Goods

• West Texas Intermediate crude rose 1% to $71.72 a barrel.

• Spot gold rose 0.4 percent to $2,631.49 an ounce.

This story was produced with the help of Bloomberg Automation.

–With assistance from Margarita Kirakosyan, Alex Nicholson, John Viljoen, Catherine Bosley, and Alice Gledhill.

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