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Survey: US business activity steady in September

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Comments from three reserve bank presidents the main focus

(Adds preliminary closing details)

By Echo Wang

Sept 23 (Reuters) -

U.S. stocks closed modestly higher on Monday as investors

assessed whether a trend will develop in the week following the

Federal Reserve's rate cut.

The gains came amid comments from Fed policymakers and

steady factory activity data, building on last week's sharp

market rally after the central bank's decision to lower interest

rates.

The Fed's pivotal move last week pushed major indexes to

monthly gains, defying the historical trend of September as a

weak month for equities.

Comments on Monday from three reserve bank presidents were

the main focus as investors searched for clues on why the

central bank kicked off its easing cycle with an outsized 50

basis-point cut.

Fed officials including Raphael Bostic, Neel Kashkari and

Austan Goolsbee supported the central bank's last rate cut and

voiced support for more cuts in the rest of the year.

Trader bets, as per the CME Group's FedWatch tool, initially

favored a larger Fed move at its upcoming November meeting,

after Governor Christopher Waller on Friday flagged that

upcoming inflation data could undershoot the Fed's 2% target.

However, the bets have swayed since then and now appear to

be a coin-toss, with markets expecting a total reduction of 74

basis points by year-end, according to LSEG data.

On the data front, U.S. business activity remained steady in

September, while average prices for goods and services increased

at the fastest pace in six months, potentially signalling a rise

in inflation in the months ahead.

"I think investors are still just sort of taking a

wait-and-see attitude, if indeed a soft landing is the most

likely outcome." said Sam Stovall, chief investment strategist

of CFRA Research in New York.

According to preliminary data, the S&P 500

gained 15.90 points, or 0.28%, to end at 5,718.45 points,

while the Nasdaq Composite gained 24.87 points, or

0.14%, to 17,974.27. The Dow Jones Industrial Average

rose 60.74 points, or 0.14%, to 42,124.10.

All eyes are on Friday's personal consumption expenditures

figure for August - the Fed's preferred inflation gauge.

Analysts say this release will be the week's most significant

catalyst.