U.S. Stocks Surge Amid Economic Optimism and Federal Reserve Rate Speculation

U.S. stocks saw significant gains, buoyed by optimism surrounding the Democratic National Convention and the Jackson Hole Economic Symposium. The Nasdaq led the rise, benefiting from strong performances by tech giants. Expectations of Federal Reserve rate cuts in September also boosted market sentiment, despite previous recession fears.

U.S. stocks surged on Monday, building upon their largest weekly percentage gain of the year as investor focus shifted towards the Democratic National Convention and the upcoming Jackson Hole Economic Symposium. The tech-heavy Nasdaq outperformed all three major U.S. stock indexes, closing higher with significant contributions from Nvidia, Microsoft, and Alphabet.

The S&P 500 and Nasdaq extended their winning streak to eight consecutive sessions, marking the longest streak in 2024, as equities rebounded from a steep sell-off driven by recession fears two weeks ago. The recent rally is part of the year's most significant weekly gains for U.S. markets, with indexes rising between 2.9% to 5.3%.

Consumer resilience amid economic softening has strengthened expectations that the Federal Reserve will lower interest rates in its September policy meeting. 'The rally is driven by hopes that the Fed will cut rates in September,' said Paul Nolte, senior wealth advisor at Murphy & Sylvest in Elmhurst, Illinois. This sentiment is supported by a slim majority of economists predicting three 25-basis-point rate cuts by year-end, reducing recession odds as inflation decreases.

(With inputs from agencies.)