The relentless rally in U.S. stocks extended Monday, buoyed by a burst of deals as traders largely ignored tempered messaging from Federal Reserve officials.

On the heels of a seven-week bull run, the S&P 500 rose 0.5 per cent as more than US$40 billion of mergers and acquisitions hit the wire Monday after months of disappointing volumes. The Nasdaq 100 climbed 0.6 per cent, to close at a record for the second consecutive session.

Wall Street’s fear gauge — the VIX — continued to hover around 12, within striking distance of recent multi-year lows.

“This week we’ll see whether the stock market’s seasonal tendency to rally in the second half of December bumps up against potential exhaustion amid one of the strongest short-term rallies of the past several years,” Chris Larkin, managing director of trading and investing at E*Trade from Morgan Stanley, said.

Whether or not the S&P 500 can extend its rally for an eighth week may be determined by near-term data readouts including durable goods orders, personal consumption expenditures — the Fed’s preferred measure of inflation — and the final third quarter gross domestic product estimate.

“The S&P 500 has closed higher seven weeks in a row only 20 other times since 1964, and it’s stretched the run to eight weeks 12 of those times,” Larkin wrote in emailed commentary.

While stocks largely shrugged off Federal Reserve officials seeking to rein in expectations for earlier and deeper-than-expected rates cuts, the rally in Treasuries took a breather Monday. Yields climbed with the rate on the two-year around 4.5 per cent and the 10-year approaching four per cent. The dollar steadied as the yen weakened.

Chicago Fed President Austan Goolsbee and Cleveland Fed President Loretta Mester were the latest to join a growing chorus of central bank officials seeking to moderate market optimism on cuts after their New York counterpart John Williams last week said bets on a March reduction were premature.

Policymakers haven’t managed to persuade the markets, according to Ian Lyngen, a strategist at BMO Capital Markets. He views today’s moves in Treasuries as more likely driven by consolidation after a steep rally. 

“The Fed has been stressing the narrative that monetary policy is now in a data-dependent mode; a stance with which investors surely agree,” Lyngen wrote. “The difference is that the market is wagering that the data breaks lower more quickly than the Committee.”

Across the pond, European Central Bank Governing Council member Bostjan Vasle took a cautious tone following ECB President Christine Lagarde’s comments last week that the bank had not discussed cuts at all.

BOJ IN FOCUS

Traders will also be watching Japan with the nation’s central bank beginning a two-day policy meeting Monday. While speculation has grown the Bank of Japan will soon end the world’s last negative-rate regime, economists see April as the most likely timing for a change, with around 15 per cent expecting Ueda to pull the plug on negative rates in January, according to a Bloomberg survey of more than 50 economists.

“The BOJ has little need to rush into making policy changes,” Societe General economists led by Wei Yao wrote in a note. “But markets will be watching for any sign the board is willing to end negative rates or yield curve control.”

In commodities, gold moved higher, while oil extended last week’s rise as major shipping lines suspended transit through the Red Sea, following escalating attacks on merchant ships. Bitcoin slumped.

Corporate Highlights:

• Brain signals in patients taking weight-loss drugs such as Novo Nordisk A/S’s Ozempic may contribute to lowering heart disease and deaths, researchers said.
• A consortium backed by Clearlake Capital and Insight Partners has agreed to buy Alteryx Inc. in a deal valuing the software developer at $4.4 billion including debt.
• Nippon Steel Corp. agreed to buy United States Steel for $14.1 billion in cash, in a deal to end months of uncertainty about the future of the historic American metal producer.
• Illumina said it will sell Grail Inc. following an appeals court finding that the acquisition of the cancer detection startup violated antitrust laws.
• Farfetch Ltd. found a backer in e-commerce company Coupang Inc., which agreed to lend $500 million, buy the assets and delist the troubled fashion platform’s shares.
• SunPower Corp. plunged the most in 15 years after the rooftop solar installer said it has breached a credit agreement and there is “substantial doubt” about its ability to continue operating.
• Shares of Vodafone Group Plc rallied after Billionaire Xavier Niel’s Iliad proposed combining its Italian business with Vodafone’s local operations.

Key events this week:

• RBA Dec. policy meeting minutes, Tuesday
• Bank of Japan decision, Tuesday
• Canada inflation, Tuesday
• Eurozone inflation, Tuesday
• Atlanta Fed President Raphael Bostic speaks, Tuesday
• New Zealand issues half-year economic and fiscal update, Wednesday
• China loan prime rates, Wednesday
• U.K. inflation, Wednesday
• Bank Indonesia rate decision, Thursday
• U.S. GDP, Thursday
• Nike earnings, Thursday
• Japan inflation, Friday
• U.K. GDP, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.5 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 0.6 per cent
• The Dow Jones Industrial Average was little changed
• The MSCI World index rose 0.1 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2 per cent to $1.0918
• The British pound fell 0.3 per cent to $1.2646
• The Japanese yen fell 0.5 per cent to 142.91 per dollar

Cryptocurrencies

• Bitcoin rose 0.3 per cent to $41,987.88
• Ether fell 2.3 per cent to $2,186.14

Bonds

• The yield on 10-year Treasuries advanced four basis points to 3.95 per cent
• Germany’s 10-year yield advanced six basis points to 2.08 per cent
• Britain’s 10-year yield was little changed at 3.69 per cent

Commodities

• West Texas Intermediate crude rose 1.7 per cent to $72.67 a barrel
• Spot gold rose 0.3 per cent to $2,026.60 an ounce

This story was produced with the assistance of Bloomberg Automation.