NEW YORK — U.S. stocks are experiencing gains on Monday, breaking a streak of volatile trading. However, this upward momentum could be temporary due to an impending interest rate decision by the Federal Reserve later this week, alongside ongoing concerns related to trade policies.
The S&P 500 rose by 1% in afternoon trading, attempting to recover from its fourth consecutive losing week. The Dow Jones Industrial Average gained 483 points, or 1.1%, while the Nasdaq composite saw an increase of 0.8% as of 2:34 p.m. Eastern time.
Recent declines in stocks have been fueled by concerns that unpredictable tariff announcements and trade policies could lead U.S. consumers and businesses to halt spending, potentially harming the economy. Confidence surveys have indicated significant drops in consumer sentiment, with some businesses already reporting shifts in customer behavior.
In a report released Monday, U.S. retailers reported weaker-than-expected revenue last month, yet the situation may be less dire than initial interpretations suggest.
The shortfall largely stemmed from lower-than-anticipated vehicle sales and reduced fuel costs. Excluding these categories, retail performance was closer to what analysts had forecasted.
Treasury yields initially increased following the release of this report, indicating potential investor confidence in the economy’s resilience, though this trend quickly reversed.
One investment strategy analyst noted that the February retail sales report suggests a subtle economic slowdown rather than an impending recession.
This shift in sentiment marks a stark contrast to the optimism seen at the end of last year when the economy was performing well, fueled by the expectation of policies to bolster growth. While hiring remains solid, concerns about a recession could erode confidence.
Federal Reserve Chair Jerome Powell will address these concerns when announcing the Fed’s interest rate decision on Wednesday.
Most analysts do not foresee any changes to interest rates during this meeting. The Fed has maintained steady rates this year, opting to assess market conditions before making further adjustments after previous rate cuts aimed at alleviating economic pressures from high inflation.
Investors will closely monitor Powell’s remarks regarding future rate adjustments. Many anticipate that the Fed may lower rates two or three times in 2025, though prematurely cutting rates could lead to inflation challenges, while maintaining high rates for too long could hinder economic activity.
On Wall Street, Intel saw a significant rise of 7.5% following the appointment of a new CEO, while PepsiCo increased by 2% after announcing a major acquisition.
Meanwhile, Tesla’s stock faced a 4.3% decline, attributed to concerns about the brand’s association with its CEO amidst shifts in government spending policies.
In the bond market, Treasury yields displayed mixed results. The yield on the 10-year Treasury fluctuated from 4.28% to nearly 4.33% and later settled at 4.30%.
Internationally, stock markets in Europe and Asia also advanced. Chinese markets performed particularly well after the release of better-than-expected factory data, with officials discussing plans to stimulate consumer spending to boost economic recovery.
Hong Kong’s stocks rose by 0.8% while Shanghai saw a modest increase of 0.2%.
