U.S Stocks Rise as Strategists See Fed Rate Cuts Spurring Gains

Wall Street started the week on a positive note Monday, with major US indexes climbing ahead of a string of economic reports that could shape the Federal Reserve’s next policy move. Investors are increasingly confident that an interest rate cut will arrive next week, potentially fueling further gains in the stock market.

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The S&P 500 opened 0.2% higher, supported by strength in technology and consumer discretionary shares. The Nasdaq 100 led the advance, rising 0.6%, while the Dow Jones Industrial Average lagged slightly, slipping 0.2%.

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Among individual movers, EchoStar Corp. surged after Elon Musk’s SpaceX struck a $17 billion deal to acquire wireless spectrum from the company. The news boosted sentiment in the communications sector, adding to the day’s early market optimism.

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Monday’s uptick came as traders boosted bets that the Fed will ease policy at its meeting next week. Historically, September has been the weakest month for US equities, but the prospect of lower borrowing costs is giving bulls a reason to stay engaged.

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“Aggressive rate cuts are coming,” said Dennis DeBusschere, president and chief market strategist at 22V Research. “Assuming the economic data continues to hold up which it is right now that should provide solid support for markets,” he wrote in a Monday note to clients.

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Top Wall Street banks see rate cuts as a powerful tailwind for stocks. David Kostin, chief US equity strategist at Goldman Sachs, projects the S&P 500 will climb another 2% by the end of 2025 and gain 6% by mid-2026. Meanwhile, Michael Wilson of Morgan Stanley argues that cuts could trigger the next phase of the bull market, particularly benefiting smaller companies.

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So far this year, small-cap names have struggled compared with large-cap peers. The Russell 2000, which tracks US small- and mid-cap stocks, has lagged the S&P 500. But strategists Emily Roland and Matt Miskin of Manulife John Hancock Investments said Monday that small caps remain “underappreciated” and may be poised for a rebound.

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Key Data on Deck This Week
Investors are also watching closely for upcoming US economic data that could reinforce or challenge these expectations. On Monday, the New York Fed will release its one-year inflation expectations at 11 a.m., followed by July consumer credit figures at 3 p.m.

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Later in the week, traders will parse several major reports: producer price data on Wednesday, the consumer price index on Thursday, and the University of Michigan’s sentiment survey on Friday. Together, these numbers will offer clues on the state of inflation, consumer strength, and whether the Fed is justified in pivoting toward cuts.

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JPMorgan strategists echoed the upbeat tone, noting that this bull market appears to have strong staying power. “This current bull market feels unstoppable with new support forming as former tent poles weaken,” the team wrote in a Monday note.

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They pointed to Broadcom’s recent earnings beat as evidence that the AI investment theme continues to act as a stabilizing force for equities. Even if this week’s inflation data comes in hotter than expected, JPMorgan analysts believe it’s unlikely to derail the Fed’s plan to cut rates at next week’s meeting.

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With Wall Street increasingly convinced that rate cuts are on the horizon, stocks have found fresh momentum heading into September. While the economic data due this week will be critical in confirming the Fed’s path, analysts agree that easier policy could extend the rally and potentially unlock value in areas of the market that have been overlooked, particularly small-cap stocks.

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For now, the outlook remains constructive: tech leadership, corporate deals, and AI-driven earnings strength are combining with dovish Fed expectations to keep bulls firmly in control.

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