By Johann M Cherian and Purvi Agarwal
(Reuters) - Wall Street's main indexes inched higher in choppy trading on Monday as investors focused on comments from Federal Reserve policymakers and factory activity data, following the central bank's decision to commence monetary policy easing.
The Fed's pivotal move on monetary policy in the previous week propped up the main indexes for monthly gains, bucking a historical trend where September has been a weak month for equities on average.
Having rallied for much of the year, the S&P 500 is a whisker away from an all-time high and the blue-chip Dow hit another intraday record high.
The Dow Jones Industrial Average rose 8.63 points, or 0.01%, to 42,068.84, the S&P 500 gained 11.07 points, or 0.19%, to 5,713.62 and the Nasdaq Composite gained 46.64 points, or 0.27%, to 17,995.97.
Eight out of the 11 S&P 500 sectors traded higher, with energy stocks leading gains with a 1.4% rise, while healthcare stocks declined 0.3%.
Among rate-sensitive growth stocks, Tesla (NASDAQ:TSLA) jumped 3.6%, Meta rose 1.2%, while Apple (NASDAQ:AAPL) lost 0.5%.
The Russell 2000 index, tracking small caps, gained 0.2%.
Comments from a number of policymakers were the main focus on the day as investors scoured for clues on why the central bank kicked off its easing cycle with an outsized 50 basis points cut.
Atlanta Fed President and voting member Raphael Bostic said inflation and unemployment were nearing normal rates, suggesting an openness to a quick pace of upcoming cuts, while a report showed Minneapolis Fed President Neel Kashkari was eying around a further 50 bps reduction in rates by year-end.
Trader bets, as per the CME Group's (NASDAQ:CME) FedWatch tool, initially favored a larger Fed move at its upcoming November meeting, after Governor Christopher Waller on Friday flagged that upcoming inflation data could undershoot the Fed's 2% target.
However, the bets now appear to be a coin toss, with markets expecting a total of 74.3 bps reduction by year-end as per LSEG data.
"The market is anticipating a lot more than the Fed is going to provide and for that reason, the market's going to be volatile," said Phil Blancato, chief executive officer of Ladenburg Thalmann Asset Management.
"It's a little bit of a pause considering the exuberance of last week. There's nothing economic right now that's spooking the market other than the Fed going a little further than anyone expected."
On the data front, a preliminary survey showed September manufacturing and services activity stood at 47 and 55.4 respectively, compared with estimates of 48.5 and 55.2.
But the spotlight will be on Friday's personal consumption expenditure figure for the month of August - the Fed's preferred inflation gauge.
Among top movers, Intel (NASDAQ:INTC) rose 2.3% after a report showed Apollo offered to make an investment of as much as $5 billion in the chipmaker.
General Motors (NYSE:GM) slipped 3.2% after Bernstein downgraded the carmaker's stock to "market perform" from "outperform".
Advancing issues outnumbered decliners by a 1.86-to-1 ratio on the NYSE and by a 1.01-to-1 ratio on the Nasdaq.
The S&P 500 posted 43 new 52-week highs and one new low, while the Nasdaq Composite recorded 50 new highs and 43 new lows.