(Monday market close) The S&P 500® index (SPX) mounted a late rally to close the month at new record highs, shaking off earlier pressure from concerns the Federal Reserve might be less aggressive with the pace of near-term rate cuts. 
Before the market's last-minute recovery, Federal Reserve Chairman Jerome Powell's afternoon remarks appeared to temporarily trip up stocks and lift yields as futures trading dialed down chances of a 50-basis-point November rate cut.

In a question-and-answer session following his speech on the economic outlook, Powell said he sees 50 basis points in rate cuts by year-end if the economy performs as he expects. That would imply separate 25-basis point cuts at each of the two remaining Fed meetings this year, while the market entered the week expecting 75 basis points of cuts by the end of 2024, with 50 possibly coming at the November meeting.

Major indexes' brisk rebound by the end of the session could indicate that the initial reaction was overdone.

"Powell expressed confidence in inflation declining further, which opens the door to more rate cuts," said Kathy Jones, chief fixed income strategist at Schwab. "He indicated that the economy is doing well, with the labor market in good shape, although it has 'clearly cooled'. He also indicated that policy is not on a 'pre-set course'. It doesn't change expectations about the path of the Fed's rate cuts. He didn't tread any new ground."

After Powell's speech, chances of a 50-basis-point November rate cut fell below 33% from nearly 50% at the start of the day, per the CME's FedWatch tool. The market now builds in 67% chances that the next rate cut will be just 25 basis points.

Earlier today, China's stock market rallied again and is up 17% over the last five sessions, but the question is whether Beijing's recent burst of stimulus that lifted stocks can also help lift consumers out of their long funk.

Here's where the major benchmarks ended:
•    The S&P 500 gained 24.26 points (0.42%) to 5,762.48; the Dow Jones Industrial Average® ($DJI) rose 17.15 points (0.04%) to 42,330.15; the Nasdaq Composite® ($COMP) added 69.58 points (0.38%) to 18,189.17.
•    The 10-year Treasury note yield (TNX) climbed five basis points to 3.8%, near the high of its recent range.
•    The Cboe Volatility Index® (VIX) eased to 16.66 after climbing above 17 earlier today but remains up from a week ago.
Not only did the major indexes gain in September, they also ended the quarter higher:
•    S&P 500: 2.02% monthly, 5.53% quarterly
•    Dow: 1.85% monthly, 8.21% quarterly
•    Nasdaq: 2.68% monthly, 2.57% quarterly
Stocks on the move
Leading S&P sectors today were energy, communication services, real estate, and health care, and six of the "magnificent seven" finished green. 
The following companies had stock price moves driven by analyst ratings, quarterly earnings, or other news:
•    Stellantis (STLA) plunged 12.52% after the auto company warned of lower-than-expected sales "across most regions" in the second half of the year, CNBC reported.
•    Apple (AAPL) notched 2.24% higher after Barron's reported the company is no longer in talks to participate in an OpenAI funding round to raise as much as $6.5 billion.

Earnings are thin this week, so corporate news could center on the automobile industry amid expected sales and delivery numbers from Tesla (TSLA), Ford (F), and General Motors (GM).

Tesla's quarterly delivery figures are due Wednesday, and analysts expect around 460,000, up 6% from a year earlier. Piper Sandler (PIPR) upped its price target for Tesla last week, anticipating 3.3% third-quarter and 5.4% calendar-year delivery increases to a total of 1.75 million units this year. The firm sees quarterly sales in China lending a hand.

In earnings earlier today, Carnival (CCL) shares wavered after the cruise operator beat analysts' expectations for earnings and revenue last quarter and cited "strong demand" and continued momentum. A miss on guidance appeared to sink shares, but they bailed water and were nearly flat by day's end.

Major U.S. indexes delivered their first positive September performance since 2019, and the third quarter also saw gains. One possible speed bump as the fourth quarter starts is the looming U.S. election. VIX futures jumped early today, and contracts for later in October and into November climbed to above 19, possibly a bearish signal for stocks. Uncertainty, reflected by a rising VIX, often has a negative impact. VIX leveled off by day's end.

Taking the market's temperature, breadth appears healthy for the S&P 500 with 82% of shares above their respective 50-day moving averages early this week. It's less impressive for the Nasdaq and Russell 2000® (RUT) at 51% and 59%, respectively. Market breadth is a way to track individual stock participation within an index. Typically, broader participation suggests healthy investor sentiment.

By that measure, several S&P sectors are positively ruddy. Utilities, materials, real estate, industrials, and consumer discretionary all top 90% in terms of stocks above their 50-day moving averages, mainly reflecting the "rotation trade" toward cyclicals related to falling interest rates and hopes for high-powered economic growth.

Speaking of cyclicals, this week's earnings highlight is arguably Nike (NKE), which reports after Tuesday's close. Shares of the footwear giant remain much lower for the year but are up sharply over the last week since Nike announced the hiring of company veteran Elliott Hill as CEO.

Job openings and manufacturing data loom Tuesday

Tomorrow morning brings the September ISM Manufacturing PMI®. It's been in contraction below 50 for months, and August was particularly soft at 47.2%, missing consensus. The ISM Services PMI® has been stronger, and that's due Thursday. For tomorrow's ISM Manufacturing, analysts expect slight improvement from August to 47.5, but that's still a marginal reading.

Employment takes the driver's seat beginning Tuesday with the August Job Openings and Labor Turnover Survey (JOLTS), followed by the ADP employment report early Wednesday. Analysts expect JOLTS to show 7.67 million job openings, even with July's 7.67 million, Trading Economics said. The quit rate hit 3.277 million in July and is also expected to stay about the same. Rising quits often signal a growing jobs market where employees feel they have more options besides their current positions. Quits have fallen steadily over the last year.

The crescendo is Friday's September nonfarm payrolls report. Early analyst estimates for September job gains are in the 140,000 range, below 142,000 in August. Unemployment is expected to remain at 4.2%, according to Trading Economics.

Worries about slowing U.S. economic metrics could take centerstage if jobs and manufacturing data this week disappoint. Any hints of a weakening U.S. economy could potentially raise questions about the potency of the "rotation" trade that began in July as investors dumped tech stocks for cyclical names in anticipation of rate cuts and associated growth.

Stocks might also struggle if a possible strike by East Coast and Gulf Coast port workers isn't averted by the midnight deadline tonight. A quick stoppage might not have much impact, but beyond a week or two, it could cause shipping lags and supply chain tangles. One question is whether the Biden administration will use its authority to end the stoppage, should one occur.

China's official NBS Manufacturing PMI and the private Caixin China Manufacturing PMI out late Sunday U.S. time both remained in contraction below 50, with the Caixin at 49.3 in September, down from August's 50.5. The NBS rose to 49.8 and beat estimates. Even so, Chinese stocks extended last week's fierce rally, with the Shanghai Composite rising more than 8% today. Hopes for a revived China gave U.S. materials and industrials stocks a boost last week.

Back home, credit quality appears solid due to the resilience of the economy, according to Schwab's Jones. Corporate profits are at record levels, the economy is growing 2.5% to 3%, inflation is falling, and investors are still looking for yield.

Jones looks for more rate cuts and continued "bull steepening," where the premium of longer-term to shorter-term Treasury yields widens. The benchmark 10-year Treasury note (TNX) yield may have less room to fall but could edge lower along with inflation, Jones added.