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Wall Street started the week on a strong note Monday, with the Nasdaq Composite closing at a record high and both the S&P 500 and Dow Jones Industrial Average posting solid gains. Investors are bracing for a busy week of economic data releases, with inflation readings set to provide new clues on the Federal Reserve’s next move.

Nasdaq and S&P 500 Extend Gains

The Nasdaq Composite rose 0.45% to finish at 21,798.70, its highest close ever, after also reaching an intraday record earlier in the session. The S&P 500 added 0.21% to settle at 6,495.15, while the Dow Jones Industrial Average climbed 114.09 points, or 0.25%, ending at 45,514.95.

Tech names once again powered the rally. Broadcom jumped 3%, continuing its strong run on the back of AI-related demand, while Nvidia gained nearly 1%, trimming some of its losses from the prior month. Big Tech also remained resilient, with Amazon and Microsoft both closing higher.

AI Boom Driving Broader Market Momentum

Ross Mayfield, investment strategist at Baird Private Wealth Management, noted the strength extends beyond the well-known “Magnificent Seven” tech giants. “There continues to be great momentum for AI spending and infrastructure buildout, and that strength is broad-based,” Mayfield told CNBC. “The average tech stock is doing really well.”

The rally highlights investor optimism that artificial intelligence and semiconductor demand will continue to support market growth, even as broader macroeconomic uncertainties loom.

Focus on Inflation Data and Fed Policy

Market participants are now turning their attention to two highly anticipated economic reports:

• Producer Price Index (PPI) for August, due Wednesday.
• Consumer Price Index (CPI), set to be released Thursday.

These inflation metrics come on the heels of a weaker-than-expected August jobs report, which fueled investor hopes for monetary easing. According to the CME FedWatch Tool, traders are pricing in a high likelihood that the Fed will cut interest rates at its upcoming policy meeting, with some even betting on a half-point reduction.

Market Outlook and Risks

Despite the upbeat momentum, strategists warn that stocks may enter a holding pattern as markets await CPI data. “We’re kind of in a catalyst vacuum,” Mayfield added, cautioning that some “downside drift” could occur with indexes at record highs during what is typically a seasonally weak period for equities.

Still, unless a major geopolitical or trade-related shock disrupts sentiment, analysts say investor focus will remain squarely on inflation and Fed policy in the weeks ahead.