US Stocks Close at Record Highs Ahead of Fed Decision
The S&P 500 and Nasdaq rose 0.47% and 0.94%, respectively, in Monday’s session, both closing at record highs. The Dow Jones also edged up by 0.11%.
These latest gains came at the start of a week in which the Federal Reserve is set to announce its highly anticipated interest rate decision. Keep reading to find out more about this and other news.
Fed to Cut Rates This Week
All eyes this week will be focused on the Fed’s upcoming interest rate decision, due to be announced on Wednesday.
The central bank is widely expected cut rates for the first time since December 2024, having held them steady at their previous six meetings. As of Tuesday morning, the markets are pricing in a 96% chance of a 25-basis point reduction in rates, according to the CME FedWatch tool.
As US stocks scaled new heights ahead of the Fed announcement, gold followed suit. The precious metal hit a record high on Tuesday morning, continuing its impressive uptrend which has seen prices rise more than 40% this year.
Conversely, as the markets digest the prospect of lower rates, the US Dollar Index – which measures the greenback against a basket of foreign currencies – weakened on Monday and continued its downward trajectory on Tuesday morning.
Alphabet Market Cap Passes $3 Trillion
Among the best performers on the S&P 500 during Monday’s session were Google parent Alphabet and Tesla, which posted gains of 4.49% and 3.56%, respectively.
In the process, Alphabet’s market capitalisation surged above $3 trillion for the first time, becoming the fourth company to reach this milestone.
Alphabet shares have soared more than 30% since the company released strong second quarter earnings in late July, which highlighted that the company was continuing to grow rapidly.
The tech giant’s share price also received a significant boost after it escaped the worst outcome of an antitrust case in the US earlier this month.
Meanwhile, Tesla shares rallied on news that CEO Elon Musk had bought approximately $1 billion of the electric vehicle manufacturer’s shares last week. It was Musk’s first open market stock purchase in over five years.
Tesla shares have struggled this year, as the EV manufacturer grapples with falling sales amidst rising competition. However, Monday’s rally lifted the stock out of negative territory, leaving it with a gain of 1.6% in 2025.
What to Look Out for This Week
As already noted, the main event this week is the Fed’s interest rate announcement on Wednesday.
Also on Wednesday, the UK’s Office of National Statistics is set to release August's Consumer Price Index (CPI) reading.
The following day, the Bank of England’s (BoE) Monetary Policy Committee (MPC) is expected to hold rates steady at its own policy meeting.
The central bank is also expected to slow the pace at which it is offloading gilts (UK government bonds) in an attempt to relieve pressure on the market for government debt.
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