U.S. stock benchmarks booked new records Monday, as investors appeared to wager that the Federal Reserve’s Chairman Jerome Powell will adopt a more dovish posture than previously anticipated when he speaks later this week at the annual Jackson Hole monetary policy symposium.

What did major stock indexes do?

The Dow Jones Industrial Average

rose 215.63 points, or 0.6%, to end at 35,335.71.

The S&P 500

advanced 37.86 points, or 0.8%, to close at 4,479.53, just shy of a new closing high. It also set an intraday trading record of 4,489.88.

The Nasdaq Composite Index

advanced 227.99 points, or 1.6%, to end at a record 14,942.65, also hitting an new intraday record of 14,963.47.

The small-cap Russell 2000

rose 40.68 points, or 1.9%.

Last week, the Dow, S&P 500 and Nasdaq Composite each retreated.

What drove the market?

Delta worries were on the back burner Monday, as bullish investors focused on the likelihood of dovish tones from the Federal Reserve later this week, but also positive developments on the COVID-19 front.

“It’s really a seesaw,” said John Carey, director for equity income at Amundi U.S., adding that the “bargain hunters” appeared to be out in force Monday on “a bit more optimism about the delta variant” in terms of signs that U.S. infections and hospitalizations might be cresting.

The U.S. also formally approved BioNTech

and Pfizer’s

COVID-19 vaccine on Monday in a move that could sway some of the unvaccinated to get a shot. The Food and Drug Administration approval applies to people who are at least 16 years old, but emergency-use authorization still stands for those between 12 and 15 and for immunocompromised individuals who qualify for a third shot.

With the U.S. population still “a long way from achieving herd immunity,” the most likely outcome of the FDA approval “is that more businesses will be comfortable with making vaccinations mandatory for their employees,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, wrote in emailed commentary.

“However, to the extent that the general public becomes more comfortable living with the virus — either because of increased vaccinations or natural immunity from recovered infections — the economy is likely to continue on its upward trajectory,” Zaccarelli said.

Investors also were warming to the idea that the Fed might wait until November or December to announce plans to roll back easy-money policies, as the Kansas City Fed’s annual Jackson Hole retreat commences on Thursday.

Powell’s highly anticipated address at the gathering — now online instead of in-person — is set for Friday.

Market participants earlier had been expecting Powell to discuss the progress toward reducing the rate of bond purchases, but not formally signal a timetable. Some strategists now think the central bank boss may not bring up tapering at all, as the delta variant of COVID-19 spreads. Activity in the options market last week had indicated that traders largely expected Powell’s Jackson Hole speech to be a nonevent.

Read: Investors look for Fed clues on tapering as Jackson Hole goes virtual because of delta variant

Tom Di Galoma, managing director of Seaport Global Holdings, said that “based on the recent [Federal Open Market Committee] minutes, we believe the Fed will not
announce a taper at Jackson Hole and will most likely announce
a taper in November or December.”

On Friday, Dallas Federal Reserve President Rob Kaplan said he may rethink his call for the Fed to quickly start to taper its $120 billion a month in bond purchases if it looks like the spread of the coronavirus delta variant is slowing economic growth.

The Fed’s shift to a virtual Jackson Hole event also might make Powell less likely to discuss removing some of the easy-money accommodations put in place in March 2020 during the worst of the pandemic’s market disruptions.

Powell’s position at the Fed seems to be in good standing. According to a Bloomberg News article, the chairman’s reappointment is supported by Treasury Secretary Janet Yellen, with President Joe Biden expected to make a decision around Labor Day.

“I think the bond market, in particular, but also the stock market, took some heart from that,” said Amundi’s Carey, adding that investors often favor “some continuity, rather uncertainty” in having a new Fed chair.

See: The real significance of Afghanistan to markets may be how it’s shaped Fed succession battle

In economic reports, IHS Markit’s flash U.S. composite index, which tracks the manufacturing and services sectors, fell to 55.4, marking an eight-month low. A reading above 50 indicates growth in the private sector.

The flash services index fell to a reading of 55.2 from 59.9, also marking its lowest since December, with economists on average expecting a reading of 59.7, while manufacturing was 61.2, a four-month low, compared with July’s all-time high reading of 63.4. 

Separately, existing-home sales rose 2% to a seasonally adjusted, annual rate of 5.99 million in July, the National Association of Realtors said Monday. Compared with June 2020, home sales were up 1.5%.

Economists polled by MarketWatch had projected existing-home sales to come in at 5.83 million. The median sales price of an existing home was up 17.8% year-over-year at $359,900, but was below the record set the month prior.

Which companies were in focus?

Chevron CorpCVX shares rose 2.6% after a report said it is requiring some of its employees to receive a COVID-19 vaccine, and is considering whether to extend that requirement to all of its employees, according to The Wall Street Journal, citing people familiar with the matter.

Shares of Madison Square Garden Entertainment Corp. MSGE rose 16.2%, after the live entertainment company, whose venues include Madison Square Garden, Radio City Music Hall and The Chicago Theater, swung to a fiscal fourth-quarter loss but reported revenue that rose above expectation as capacity restrictions related to the COVID-19 pandemic were lifted in several U.S. markets.

Virgin Orbit is set to go public, as the launch and space solutions company announced Monday a merger agreement with special-purpose acquisition company NextGen Acquisition Corp. II NGCA, in a deal that values Virgin Orbit at about $3.2 billion. 

Shares of Trillium Therapeutics Inc. TRIL nearly tripled, skyrocketing 188.8%, after the immuno-oncology company announced an agreement to be acquired by Pfizer in a cash deal valued $2.26 billion.

JD.com IncJD reported Monday second-quarter profit that fell but beat expectations, while revenue rose above forecasts, as the China-based supply chain-based technology and service provider added more than 32 million new users, a quarterly record. Shares rose 3.3%.

Shares of Uber Technologies UBER rose 2.6% and Lyft LYFT gained 2.9%, shrugging off earlier losses after a judge ruled a California proposition treating drivers as contractors instead of employees was unconstitutional.

Shares of Pfizer gained 2.4% after the FDA announcement and those for BioNTech added 9.6%.

How did other assets fare?

The yield on the 10-year Treasury note TMUBMUSD10Y was nearly unchanged at 1.254%. Yields and debt prices move in opposite directions.

The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, fell 0.6%.

Oil futures closed sharply higher, with the U.S. benchmark CL. 1 up 5.6% to settle at $65.64 a barrel on the New York Mercantile Exchange. Gold futures GC00 closed up nearly 1.3% to settle at $1,806.30 an ounce, to retake a psychologically significant level at $1,800.

In European equities, the Stoxx Europe 600 SXXP closed 0.7% higher, while London’s FTSE 100 UKX rose 0.3%.

In Asia, the Shanghai Composite SHCOMP jumped 1.5% and Japan’s Nikkei 225 NIK rose 1.8%, while Hong Kong’s Hang Seng Index HSI closed 1.1% higher on Monday.

Steve Goldstein contributed reporting

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