US stocks closed higher on Monday as optimism over US-China trade talks and expectations of Federal Reserve rate cuts fuelled gains. The S&P 500 rose 0.5 per cent to finish at 6,615.28, its first close above 6,600. The Nasdaq Composite advanced 0.9 per cent to a record 22,348.75, while the Dow Jones Industrial Average added 49 points, or 0.1 per cent, to end at 45,883.45.
Trade negotiations in focus
Investors tracked developments in Washington and Beijing as senior officials continued discussions on tariffs and the deadline for the sale of TikTok’s US operations. President Donald Trump suggested progress had been made, though reports indicated the US may still press ahead with a ban if China does not ease demands on tariffs and technology restrictions.
The talks coincided with fresh tensions in the technology sector. China’s market regulator said Nvidia had violated anti-monopoly law and pledged to continue its probe into the chipmaker. Nvidia shares ended little changed, in contrast to other megacap stocks.
Musk’s billion-dollar buy
Tesla shares jumped 3 per cent after Elon Musk disclosed a US$1bn insider purchase, his largest open-market buy on record and his first since 2020. The move was seen as a strong signal of confidence in Tesla’s strategy to expand into robotics at a time of intensifying competition in electric vehicles.
Other technology leaders also lifted the market. Alphabet rallied more than 4 per cent, helping push the Nasdaq to fresh highs.
Fed meeting looms
Economic data showing a weakening labour market and subdued inflation bolstered expectations that the Fed will begin cutting rates when its two-day meeting concludes on Wednesday. Market pricing implies a near-96 per cent probability of a quarter-point cut, with only slim odds on a steeper move.
Goldman Sachs forecasts cuts in September, October and December, with two more next year. JP Morgan, however, cautioned that equities often stall in the early stages of easing cycles, warning investors may need to price in more downside risk.
Australian outlook
The positive lead from Wall Street is expected to lift Australian equities at the open, with SPI futures indicating a 0.5 per cent rise to 8,889. Technology stocks are set to play a key role, following overnight gains in Alphabet and Tesla.
Investors are also watching for US retail sales data tonight and the Fed’s policy statement early Thursday AEST.
