S&P 500 and Dow Reach Record Highs Amid Stimulus-Driven Market Surge

The S&P 500 and Dow closed at record highs, driven by a surge in mining stocks after China announced a significant stimulus package. Despite weak U.S. consumer confidence data, China's policy moves boosted international and U.S. sectors sensitive to Chinese economic conditions, particularly metals and mining.

The S&P 500 and Dow Jones Industrial Average ended at record highs on Tuesday, despite weak consumer confidence data, as mining stocks soared following China's announcement of a comprehensive stimulus package. The initial gains were pared after a report from the Conference Board showed an unexpected drop in U.S. consumer confidence in September, fueled by growing concerns about the labor market.

"Today's price action is predominantly about the policy announcements from China overnight. Direct support for their equity market and promises to reduce interest rates have triggered a sharp rise in international stocks," noted Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina. "This is spilling over into parts of the U.S. market, particularly those more sensitive to China, such as the metals and mining sectors."

The Dow climbed 83.57 points, or 0.20%, to 42,208.22, while the S&P 500 rose 14.36 points, or 0.25%, to 5,732.93, and the Nasdaq Composite added 100.25 points, or 0.56%, to 18,074.52. Among the 11 sectors of the S&P 500, materials led with a 1.35% rise.

Metal prices surged after China, the world's second-largest economy, unveiled its largest stimulus effort since the pandemic to counteract deflation. Copper and lithium miners benefited significantly, with Freeport-McMoRan up 7.93%, Southern Copper gaining 7.22%, Albemarle advancing 1.97%, and Arcadium Lithium climbing 3.2%.

U.S.-listed shares of Chinese firms also saw substantial gains: Alibaba rose by 7.88%, PDD Holdings added 11.79%, and Li Auto advanced by 11.37%, following positive trends in domestic markets. Megacap stocks showed mixed results, with Nvidia gaining 3.9%, whereas Microsoft slipped 1.15%. The broader technology sector saw a 0.79% increase.

The Philadelphia SE Semiconductor Index increased by 1.23%, with Qualcomm and Intel rising 0.54% and 1.11%, respectively. Meanwhile, Federal Reserve Governor Michelle Bowman warned that key inflation metrics remain "uncomfortably above" the Fed's 2% target, advising caution as the Fed considers interest rate cuts.

This week, market attention remains on weekly jobless claims and personal consumption expenditure data. In stock-specific news, Visa fell 5.49% after the U.S. Department of Justice filed a lawsuit against the company for alleged antitrust violations, negatively impacting the financial sector, which dropped by 0.92%.

On the NYSE, advancing issues outnumbered decliners by a 1.93-to-1 ratio. There were 636 new highs and 43 new lows. The S&P 500 logged 62 new 52-week highs with no new lows, while the Nasdaq Composite recorded 103 new highs and 101 new lows.

Volume on U.S. exchanges was 11.42 billion shares, compared to the average of 11.60 billion over the last 20 trading days.

(With inputs from agencies.)