• The tech-heavy Nasdaq Composite hit a new intraday record high, closing up 0.4% as investors bet on an imminent Federal Reserve rate cut.
  • Market optimism, fueled by expectations of monetary easing to counter labor market softness, outweighed concerns over economic data.
  • Large-cap technology stocks, including Microsoft, were significant contributors to the index's gains, which has risen nearly 5.5% from its September lows.

A wave of optimism ahead of the Federal Reserve's upcoming policy meeting propelled the Nasdaq Composite to an intraday record high on Monday, with the index last trading up 0.4%. The rally was largely driven by significant gains in the technology sector, with stocks like Microsoft leading the charge.

The move reflects a growing conviction among traders that the central bank will cut interest rates in response to recent signs of a weakening U.S. labor market. This sentiment has provided a firm floor for equities, particularly growth-oriented tech names, even as bond yields have inched higher; the U.S. 10-year government bond closed the previous week at 4.07% as markets recalibrate ahead of the Fed’s decision.

“The market is pricing in a high probability of accommodative action from the Fed,” said one portfolio manager, who asked not to be named because the discussions are private. “There’s a clear bet being placed that the Fed will prioritize supporting growth.”

This tech-led rally has starkly outpaced movements in European indices, which have shown only modest gains amid headwinds like the recent Fitch downgrade of France's sovereign credit rating. The S&P 500 and Dow Jones have also posted solid gains for the month, but the Nasdaq's outperformance underscores the concentrated strength in megacap technology stocks.

Efforts to reach representatives at several major tech firms for comment on the day's trading were not immediately successful. The sustained upward momentum, with the index climbing almost 5.5% from its lows this month, suggests a robust risk-on appetite, though analysts caution that volatility is likely around the Fed's announcement. The market's next move hinges almost entirely on whether the central bank delivers the expected dovish pivot.