MARKET SNAPSHOT

U.S. stocks rose, adding to third-quarter gains, after Federal Reserve Chair Jerome Powell said that the "baseline" scenario was that the central bank would cut rates by just 0.25 percentage point at each of its next two meetings. Treasury yields advanced as Powell said a soft economic landing was in sight. The U.S. dollar gained against peers, also in reaction to commentary from Powell. Oil futures fell, pressured by expectations that major oil producers will boost production in December.

MARKET WRAPS

EQUITIES

Fed Chair Powell said the central bank would continue to reduce interest rates from a two-decade high to help support hiring and preserve a growing economy. But he suggested officials didn't currently see a reason to lower them as aggressively as they did at their most recent meeting.

The S&P 500 rose 0.4%, ending the month up 2% and the quarter up 5.5%. The tech-heavy Nasdaq Composite also climbed 0.4%, while the Dow Jones Industrial Average ticked up less than 0.1%.

In Asian trading, Chinese stocks had their best day since 2008, after China took more steps over the weekend to rejuvenate the economy, including the People's Bank of China's announcement that it will be instructing banks to lower mortgage rates for existing home loans before Oct. 31.

The benchmark Shanghai Composite Index ended 8.1% higher as investors cheered further stimulus measures. The Shenzhen Composite gained 11% and the ChiNext Price Index added 16%. Semiconductor and software stocks led the gains. Hong Kong's benchmark Hang Seng Index advanced 2.4%, also in reaction to China's measures.

Japan's Nikkei Stock Average closed sharply lower on worries over policies under incoming Prime Minister Shigeru Ishiba, including the possibility of higher taxes. The Nikkei lost 4.8% with automakers and conglomerates weighing on the index.

Australia's S&P/ASX 200 rose 0.7%, closing at a record for the seventh time in the last 11 trading days and rounding out a monthly gain of 2.2%. Commodity stocks again led gains following China's announcements of economic stimulus.

New Zealand's NZX-50 closed 0.3% lower, slipping to a monthly loss of 0.2% on weakness in shares of its largest companies.

COMMODITIES

Oil futures edged lower, pressured by expectations that major oil producers will boost production in December - leading to a surplus of supplies as the outlook for demand remained uncertain.

West Texas Intermediate crude for November delivery fell less than 0.1% to $68.17 a barrel and November Brent dropped 0.3% to $71.77a barrel.

"Concerns over an oversupply of crude intensified after reports indicated that OPEC+ would proceed with its plans to increase production by 180,000 barrels per day starting in December," said Ernesto Di Giacomo, senior market analyst at XS.com.

Front-month Comex October gold fell 0.3%, the second-consecutive loss, to close at $2636.10 an ounce. Prices gained 13% in the third quarter, the largest quarterly gain since the first quarter of 2016.

TODAY'S TOP HEADLINES

Fed's Powell Says Rate Cuts Can Sustain Soft Landing, but Sees No Need to Rush

NASHVILLE, Tenn.-Federal Reserve Chair Jerome Powell said officials would continue to reduce interest rates from a two-decade high to maintain solid economic growth, but they didn't currently see a reason to lower rates as aggressively as they did at their most recent meeting.

"Overall, the economy is in solid shape; we intend to use our tools to keep it there," Powell said Monday afternoon at a conference in Nashville, Tenn. Because officials have a relatively favorable economic outlook, "this is not a committee that feels like it's in a hurry to cut rates quickly," he added.

The Fed lowered interest rates by a half-percentage point at its meeting two weeks ago, opting for a bolder start in making its first rate reduction since 2020. That dropped the central bank's benchmark rate to a range between 4.75% and 5%, and down from its highest level in two decades.

A Dockworkers Walkout Would Close Ports From Maine to Texas and Slam the U.S. Economy

Dockworkers are preparing to strike at midnight across dozens of ports from Maine to Texas, threatening to block the movement of a swath of U.S. trade and rattle the American economy five weeks ahead of the presidential election.

Trade groups representing hundreds of retailers and manufacturers from Walmart and Target to Caterpillar and General Motors have appealed to the Biden administration to intervene, warning a shutdown could hobble businesses and trigger renewed inflation during the busy holiday shopping season.

"The effects of the strike have already begun," said Tim Ryan, owner of Square 1 Farms, a Sunrise, Fla.-based importer that sells asparagus to supermarkets such as Walmart, Kroger and Wegmans.

ECB's Lagarde More Confident of Meeting Inflation Target

The European Central Bank is more confident that inflation is going to settle at its target after a series of recent data releases, and will take that into account when it next sets policy, President Christine Lagarde said Monday.

Figures released Friday and earlier Monday by the eurozone's largest economies all point to a big decline in the inflation rate during September. Economists expect figures for the eurozone as a whole that will be released Tuesday to record the first drop below the ECB's 2% target since mid-2021.

"The latest developments strengthen our confidence that inflation will return to target in a timely manner," Lagarde said in a statement to the European Parliament.

Chicago business-activity index remains in contraction territory for 10th straight month

The Chicago Business Barometer, the gauge of business activity also known as the Chicago PMI, rose to 46.6 in September from 46.1 in August.

Economists polled by the Wall Street Journal had forecast a 45.3 reading.

The index has been below the 50 break-even point between contraction and expansion since last November but has recovered from a low of 35.4 in May.