Dow, S&P 500 rise as stocks recover from deep losses

U.S. stocks rebounded on Monday after the S&P 500’s worst week since the start of 2023, as inflation returned to the focus of investors assessing pressures that could influence the size of rate cuts.

The S&P 500 (^GSPC) rose 0.7%, following a 1.7% drop for the benchmark, while major U.S. indexes closed with heavy losses. The Dow Jones Industrial Average (^DJI) rose 0.6%, or more than 250 points, while the Nasdaq Composite (^IXIC) led the advance with a gain of about 0.9%.

Stocks were poised to regain some lost ground after August’s jobs report failed to address a key question: How aggressively will the Federal Reserve cut interest rates? The neither hot nor cold data left Wall Street guessing as to whether a 25 or 50 basis point cut is likely at this month’s policy meeting.

Read more: Fed forecasts for 2024: What experts say about the possibility of a rate cut

At the same time, comments from Fed officials appeared to tilt the market in favor of a 0.25% cut, suggesting incoming data should support the need for further easing.

Focus is now on a new consumer inflation print due on Wednesday to provide clues on the rate path. The reading on price pressures will be followed by a producer inflation report on Thursday, the last inflation inputs before the Fed’s September 18 policy decision.

The corporate highlight of the week is Apple’s ( AAPL ) annual iPhone event, which begins Monday. It is expected to launch its iPhone 16 line and offer an update to Apple’s Intelligence AI features, both of which are being watched closely as the likes of Huawei challenge the “Magnificent Seven” tech megacap in the market.