LONDON – The S&P 500 and Nasdaq hit record highs on Monday as dovish remarks from Federal Reserve chief last week bolstered optimism in an economic rebound and eased fears of a sudden tapering in monetary stimulus.

At 10:16 am ET, the S&P 500 was up 0.31 percent and the Nasdaq Composite was up 0.63 percent.

The Dow Jones Industrial Average, on the other hand, was down 0.16 percent as economically sensitive energy stocks slipped 0.8 percent.

Falling bond yields also pressured bank stocks, with the S&P 500 banking index down 1.8 percent.

Apple Inc, Microsoft Corp, Amazon.com , Google-owner Alphabet Inc and Nvidia rose between 0.6 percent and 1.3 percent, helping the tech-heavy Nasdaq outperform the S&P 500 and the Dow.

The benchmark S&P 500 is tracking its longest monthly winning streak since 2018 on the promise of easy money, with investors shrugging off signs of a slowing economic recovery and surging COVID-19 cases.

The S&P 500 has risen 2.6 percent so far in August – a seasonally weak period for stocks – and Wells Fargo analysts said last week they expect the index to rise another 8 percent by the end of the year.

Elsewhere, world stocks hovered around record highs, confident the US Fed is in no rush to step away from massive stimulus, while oil prices fell as Hurricane Ida weakened after it forced precautionary shutdowns of US Gulf oil production.

Major European bourses were broadly steady, while US stock futures were just a touch firmer , with overall trade subdued given a public holiday in Britain.

The Europe-wide STOXX 600 was on course to end August with a more than 2 percent rise – its seventh month of gains in what would be its longest such winning run in over eight years.

Asian stocks hit a two-week high and Japan's blue-chip Nikkei closed up 0.5 percent, leaving MSCI's world stock index hovering at record highs.

Positive sentiment in equity markets was underpinned by Friday's Jackson Hole speech by Federal Reserve Chair Jerome Powell in which he said tapering of stimulus measures could begin this year, but added the central bank would remain cautious. read more

"The market is more focused on the medium-term, so any weakness in equity markets has been seen as an opportunity to buy the dips and Powell has helped preserve these trends," said Pictet Wealth Management strategist Frederik Ducrozet.

"We are going from great to good — the outlook is not as great as it was earlier this year but it's still consistent with further equity market gains."

Oil off highs

Oil prices pulled back from a four-week high as Hurricane Ida weakened into a Category 1 hurricane within 12 hours of coming ashore.

Nearly all US offshore Gulf oil production, or 1.74 million barrels per day, was suspended in advance of the storm.

Focus turned to a meeting of the Organization of the Petroleum Exporting Countries and its allies on Wednesday, with sources telling Reuters the group is likely to keep its oil output policy unchanged and continue with its planned modest production increase. read more

Brent crude futures were a touch lower on the day at US$72.66 a barrel, holding below four-week highs hit earlier in the session. They rose more than 11 percent last week in anticipation of disruptions to oil production from Hurricane Ida.

US oil fell 0.4 percent to US$68.46 a barrel, having jumped a little more than 10 percent over the last week.

"Hurricane Ida will dictate oil's near-term direction," said Jeffrey Halley, senior market analyst at OANDA. "If Ida weakens and its path of destruction is lower than expected, oil's rally will temporarily lose momentum here."

In bond and currency markets, it was the Fed's dovish tone that held sway, with Friday's key US jobs report in focus.

The 10-year US Treasury yield was steady at around 1.30 percent, while the dollar index – which measures the greenback against a basket of currencies – steadied just above a two-week low.

The euro was steady at US$1.1800 , having touched a three-week peak earlier, while the dollar was little changed at 109.87 yen .

"If we get a (U.S. payrolls) number close to a million that would increase the odds of taper being announced in September, but if the number is line with expectations then there's a 50-50 chance for a September move," said Vasileios Gkionakis, global head of FX strategy at Lombard Odier Group.