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Investing.com - The S&P 500 closed higher Monday, rebounding from Friday’s big sell off, underpinning by growing expectations for a sooner Federal Reserve rate cut and an ongoing climb in big tech following recent upbeat earnings.
At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average gained 575 points, or 1.3%, the S&P 500 index rose 1.5%, and the NASDAQ Composite climbed 2%.
The main averages on Wall Street sank on Friday, with the benchmark S&P 500 registering its worst day in more than two months, after U.S. President Donald Trump signed an executive order on Friday imposing steep tariffs on imports from nearly 70 countries.
A soft jobs report, which featured heavy downward revisions, also weighed on sentiment, as did Trump’s dismissal of the head of the statistics bureau charged with compiling the jobs data, arguing -- without evidence -- that the numbers were "rigged." Analysts flagged that the firing casts doubt over the longstanding reliability of U.S. economic data.
Weak jobs data lifts rate cut hopes
The U.S. economic data slate centers Monday largely around factory orders for June, amid worries about the health of the U.S. economy after the U.S. Labor Department reported on Friday that nonfarm payrolls rose by only 73,000 in July.
This was well below the expected 110,000, and May and June figures were also revised downward by a combined 258,000 jobs.
Investors viewed this slowdown as a clear signal that the labor market is cooling, prompting the odds of a Federal Reserve rate cut in September to surge to over 80%.
That said, Morgan Stanley strategist Mike Wilson reiterated his bullish stance on U.S. equities in a note Monday, stating that the bank would be buyers into any market weakness, despite expectations of a modest third-quarter pullback.
“We’ve been bullish for the last few months primarily due to the V-shaped recovery in EPS revisions breadth,” Wilson wrote in a new note.
He said April’s “Capitulation Day” and “Liberation Day” marked the end of the bear market that began in 2024 and ushered in a new bull market, now four months old.
While Friday’s soft labor report and a Federal Reserve still on hold could trigger a short-term consolidation, Wilson said, “We’re buyers of pullbacks and bullish next 12M.”
Tech continues to lead markets higher as AI optimism grows
NVIDIA Corporation (NASDAQ:NVDA), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms (NASDAQ:META) led the tech sector higher, with the latter two adding onto their recent gains following its blowout quarterly results released last week.
AMD, Caterpillar , Disney earnings awaited
Looking ahead, attention shifts to a packed earnings calendar. More than 150 companies are set to report this week, including major names across tech, industrials, and consumer sectors.
The corporate earnings season has been largely solid so far, which has helped to underline the staying power of a multi-year boom in enthusiasm around the applications of artificial intelligence.
On Tuesday, Advanced Micro Devices (AMD) (NASDAQ:AMD) and Caterpillar (NYSE:CAT) will report, with investors watching for insight into semiconductor demand and global industrial activity.
Wednesday will bring results from Walt Disney (NYSE:DIS), McDonald’s (NYSE:MCD), and Uber Technologies (NYSE:UBER).
Elsewhere, Berkshire Hathaway (NYSE:BRKb) stock fell after Warren Buffett’s sprawling conglomerate posted a $3.76 billion write-down on its stake in consumer food company Kraft Heinz (NASDAQ:KHC).
Tesla (NASDAQ:TSLA) stock rose after the company approved a 96 million share restricted stock award for CEO Elon Musk, following a recommendation by a special committee of disinterested directors Robyn Denholm and Kathleen Wilson-Thompson on August 1.
(Peter Nurse, Ayushman Ojha contributed reporting.)