Stocks ended higher on Monday, driven by significant gains from key Magnificent 7 stocks. The Dow Jones Industrial Average closed up 0.2% at 38,790, the S&P 500 rose 0.6% to 5,149, and the Nasdaq Composite gained 0.8% to 16,103. Alphabet’s stock surged 4.6% after reports suggested that Apple is considering licensing Google’s AI models for the iPhone, leading to positive momentum in the market. Shares of Apple also rose by 0.6% following this news.
CFRA Research analyst Angelo Zino maintained Buy ratings on both Alphabet and Apple, highlighting the importance of AI capabilities for Apple’s new iPhones. Zino believes that Google is well-positioned to secure a deal with Apple for AI on its devices. Tesla was another standout performer, with its stock climbing 6.3% after announcing price increases for its Model Y electric vehicles in Europe.
Investors are eagerly awaiting the Federal Reserve meeting this week for insights into the central bank’s rate-cut plans. While no change to the federal funds rate is expected, the Fed’s dot plot projections could provide guidance on future monetary policy decisions. Deutsche Bank economists anticipate a hawkish-leaning message from the Fed due to higher-than-expected inflation data. However, they do not expect the Fed to signal less easing this year.
Overall, the market outlook remains positive, with futures traders pricing in a 34% chance of a full percentage point rate cut by the Fed this year. The first quarter-point rate cut is expected in June. Despite some uncertainty, investors are optimistic about the potential for continued economic growth and market stability in the coming months.