U.S. stocks mixed, focus on higher-for-longer rates

STORY: Wall Street’s main indexes kicked off October with a mixed close on Monday as investors weighed clues from Federal Reserve officials on the path of interest rates.

The Dow dipped about two-tenths of a percent, the S&P 500 was flat and the Nasdaq gained nearly seven-tenths.

In remarks on Monday, Fed Chair Jerome Powell stressed the central bank's focus on price stability but did not comment on his near-term outlook on rates.

However, Fed Governor Michelle Bowman said she remains willing to support another rate hike if upcoming data shows progress on inflation is stalling.

But riskier than another hike is the prospect of rates staying higher for longer, says Geetu Sharma, Founder and Investment Manager of AlphasFuture.

“From a market standpoint, especially in equities, it does seem like markets are not yet fully pricing this table-top mountain effect that rates are going to stay higher for longer. And, of course, if we see any weakness in economic data that may not happen, but right now, as we stand, it does not look like there is any material slowdown in the U.S. economy, or any signs of a upcoming recession. And so I think the biggest risk is that rates stay high, I think the even bigger risk is that inflation starts to rise again."

Economic data on Monday showed U.S. construction spending increased in August. The monthly jobs report is due on Friday.

In company news, shares of Nvidia gained about 3% after Goldman Sachs added the chipmaker's stock to its conviction list.

And Tesla shares reversed course to end up about half a percent after dropping nearly 3% earlier, following news the electric vehicle maker missed market estimates for third-quarter deliveries.