Stocks end sharply higher on hopes of abating Fed
STORY: U.S. stocks closed higher on Monday, extending last week's rally as signs of economic weakness led investors to hope the Federal Reserve might ease up on its aggressive interest-rate hikes.
The Dow rose one and a third percent. The S&P 500 added a percent and change, while the Nasdaq gained just shy of a percent.
A report from S&P Global showed a contraction in business activity this month, offering a hint that the Fed's barrage of steep interest rate hikes are having their desired effect.
Mike Mussio, president at FBB Capital Partners, said that's raising hopes the central bank could begin slowing the pace of rate increases.
"You're starting to see some data points, in terms of the broader economy, that are... continue to be - other than just inflation - that continue to be worse than expected. And, so, the expectation is you have two hundred PhD economists at the Fed that are sitting around looking at everything and thereby the more bad data there is, bad news maybe leads to good news. The good news being that maybe the Federal Reserve is done skipping two steps every time they raise rates 75 basis points. And maybe we just skip one step and then eventually we don't skip any steps at all."
Shares of Microsoft and Google-parent Alphabet rose ahead of their earnings reports due on Tuesday. Shares of Apple also gained. The iPhone-maker posts results on Wednesday.
Shares of Tesla slid after the electric automaker cut prices for its Model 3 and Model Y cars by as much as 9% in China, signaling softening demand in the world's largest auto market.
And U.S.-listed shares of Chinese companies such as Tencent, JD.com and Baidu plunged as investors worried President Xi Jinping's tighter grip on power and new leadership team would lead to ideology-driven policies that could hurt the country's private sector.
