• Wall Street stocks rose significantly, with the Dow Jones hitting a record high due to strong performances by Tesla and Amazon.
• The U.S. economy showed strength with increased consumer spending in July, leading to expectations of a modest interest rate cut by the Federal Reserve.
• Despite a tumultuous month, shares rebounded with the S&P 500 trading near record highs, and all 11 S&P 500 sector indexes rose.
• The market remains sensitive to economic data and policy adjustments, which will continue to shape its outlook in the coming weeks.

The Wall Street stocks experienced a significant rise, with the Dow Jones Industrial Average scoring a second consecutive all-time closing high. This surge was primarily driven by the performance of Tesla and Amazon, which climbed after fresh U.S. economic data raised expectations that the Federal Reserve would implement a modest interest rate cut in September. The U.S. economy demonstrated strength as consumer spending increased solidly in July, while prices rose moderately. This economic scenario, often referred to as a Goldilocks economy, is characterized by steady growth that does not fuel excessive inflation.

Cameron Dawson, chief investment officer at Newedge Wealth, described the situation as another sign of a soft landing. He stated, It's another one of those Goldilocks kind of reports really threading a needle right down the center. The market is really getting exactly what it wanted. The performance of specific stocks also contributed to the positive market movement. Amazon.com and Tesla each jumped over 3%, while Broadcom rallied nearly 4%. Marvell Technology surged 9% after the chipmaker forecast quarterly results above estimates. These individual stock performances added to the overall optimism and helped drive the market higher.

Key Market Indicators and Expectations

The personal consumption expenditures report came on Friday after Fed Chair Jerome Powell last week expressed support for an imminent policy adjustment. This report, along with the upcoming Labor Department's August jobs report, due on Friday, will be crucial in shaping the market's expectations. Money markets suggest traders mostly expect the Fed to cut rates by 25 basis points in September. The odds of a more aggressive 50 basis point cut diminished after the release of the upbeat economic data on consumer spending. This information impacted the market's outlook positively, as investors interpreted it as a sign that the Fed might take a less aggressive stance on tightening monetary policy.

Despite the positive outlook, the market had to navigate through a tumultuous month after signs of a sudden moderation in the labor market in early August sparked fears of a U.S. recession. The influence of the Japanese yen carry trade worsened the rout. However, shares have rebounded since then, with the S&P 500 trading near record highs. The S&P 500 climbed 1.01% to end at 5,648.40 points. The Nasdaq Composite Index climbed 1.13% to 17,713.62 points, while the Dow Jones Industrial Average rose 0.55% to 41,563.08 points. All 11 S&P 500 sector indexes rose, led by consumer discretionary up 1.9%, followed by a 1.1% gain in industrials.

Stock Performances and Market Outlook

For the month, the S&P 500 rose 2.3%, the Dow added 1.8%, and the Nasdaq climbed 0.6%. Nvidia rose 1.5%, rebounding from a 6.4% drop on Thursday after the artificial intelligence-chip bellwether failed to match sky-high investor expectations, despite upbeat results and a broadly in-line forecast. Novavax surged 8.6% after the U.S. Food and Drug Administration granted emergency use authorization for an updated version of its COVID shot. Ulta Beauty slid 4% after it trimmed its annual results forecasts, citing slowing demand for higher-priced cosmetics and fragrances at its stores. Intel jumped almost 10% following a report it was exploring options that could include a merger. Dell Technologies, another AI-related stock, advanced 4.3% after lifting its annual revenue and profit forecasts.

Shares of Trump Media & Technology Group, majority owned by former U.S. President Donald Trump, dipped 1.7% to a record low, leaving its stock market value at $3.9 billion. Advancing issues outnumbered falling ones within the S&P 500 by a 6.6-to-one ratio. The S&P 500 posted 79 new highs and two new lows; the Nasdaq recorded 84 new highs and 77 new lows.