Wall Street’s three major stock indexes closed higher on Monday despite “disappointing” manufacturing data from the New York Federal Reserve.
The Dow Jones index finished at 33,348.6, gaining 47.98 points or 0.14 percent. The S&P 500 concluded the trading session at 4,136.28, rising by 12.2 points or 0.30 percent. Meanwhile, the Nasdaq Composite ended the day at 12,365.21, increasing by 80.47 points or 0.66 percent.
Shares of semiconductor companies boosted the tech-leaning Nasdaq index. Intel outperformed its peers by posting a 2.94 percent increase to $29.80. The chip-making company announced last week that it would trim its global force this year. NVIDIA stock also rose by 2.16 percent to $289.53.
Berkshire Hathaway increased by 0.96 percent to $495,900.00. The conglomerate announced Monday that it acquired a 2.6 percent stake in Virginia-based bank Capital One. Recent reports revealed that the Omaha-based holding company sold its stakes in U.S. Bancorp and Bank of New York Mellon in the first quarter of the year.
Regional bank stocks improved in the stock market after the Federal Deposit Insurance Corporation (FDIC) proposed an assessment of larger lenders. Shares of PacWest Bancorp jumped 17.58 percent to $5.35, while Western Alliance Bancorporation increased by 11.98 percent to $30.76.
The FDIC proposal suggested increased fees for “big” U.S. banks to cover the $15.8 billion loss from the failure of Silicon Valley Bank and Signature Bank last March. The agency categorizes large lenders as lenders with more than $5 billion in uninsured deposits.
New York State’s manufacturing index hit -31.8 in May after a 35.4-point increase in the previous month. Analysts earlier predicted that the index would post -3.75. According to the New York Fed’s survey, the gauge of new orders falls by 53.1 points this month to -28.0. Analysts pointed out that New York’s manufacturing data had shown volatility since last year.
Despite the data from New York, analysts said expectations of interest rate cuts by the Fed fueled the rally in the stock market. Fed fund futures predict that the U.S. central bank will begin cutting interest rates in September. The market also expects the Fed to pause the rate hike cycle in its next policy meeting.
Fed officials said they would monitor economic data to determine the next policy move. Recent data offered signs that the Fed’s monetary policy had slowed the U.S. inflation rate. This month’s preliminary consumer confidence index showed a significant decrease from 63.5 to 57.7. High consumption contributes to soaring price growth, meaning that declining consumer confidence can help stabilize prices.
Analysts said the upcoming debt ceiling talks also supported the stock market rally on Monday.
“It feels like there’s some optimism regarding talks on the debt ceiling. Part of that may be political gamesmanship, but it’s helping the market a little bit today.”
Joseph Sroka, NovaPoint chief investment officer
Updates on bond yields, commodities
U.S. Treasury yields rose on Monday, which analysts said showed lingering concerns about slow-cooling inflation. The yield of 10-year notes rose to 3.4962 percent from 3.463 percent hit on Friday evening. The 30-year bonds yielded 3.8392 after posting 3.777 on Friday.
Oil prices increased after three straight sessions of declines as wildfires in Alberta, Canada, heightened concerns about its availability. U.S. crude rose by 1.53 percent to $71.11 a barrel, while Brent was up 1.43 percent to $75.23.
Gold also strengthened in the market, with spot gold adding 0.2 percent to trade at $2,015.73 an ounce.