Wall St on the rise with inflation figures in sight

Wall St on the rise with inflation figures in sight
Wall St on the rise with inflation figures in sight

U.S. stock indexes edged higher on Monday, nearing record highs after a recent string of gains, as investors await key inflation figures this week to gauge the likelihood of interest rate cuts in 2024.

Indexes inched closer to all-time highs reached in March, boosted by higher-than-expected profits and signs of a slowing labor market that fueled bets on one or two interest rate cuts by the U.S. Federal Reserve this year.

“Not only are earnings better than expected, but the outlook has been upgraded,” said Thomas Hayes, president of Great Hill Capital LLC.

“The market likes this, but it also needs reassurance that inflation is not rising and could even fall in order to give the Fed room to at least one, or even two drops before the end of the year.

Inflation data, eagerly awaited on Wednesday, is expected to show that core consumer prices rose 0.3% month-on-month in April, for an annual rise of 3.6%, according to the forecasts of economists polled by Reuters.

Investors will also focus on a range of other economic data this week, including monthly producer prices, retail sales and weekly jobless claims.

Although Fed policymakers have reassured markets that the next monetary policy action is not a rate increase, the timing of the first cut remains uncertain. On Monday, Phillip Jefferson, vice chairman of the Fed, said he favored holding interest rates until it was clear that price pressures ease.

According to LSEG’s rate probabilities app, traders are currently pricing in rate cuts of 44 basis points from the Fed by the end of 2024, with odds of at least a 25 basis point cut. basis points in September amounting to 66%.

The top companies reporting results this week are Home Depot, Walmart, Cisco and Alibaba.

Of the 459 S&P 500 companies that reported earnings through Friday, 77.3% beat analysts’ earnings estimates, according to LSEG data. The long-term average is 66.7%.

Monday’s gains follow a multi-week streak of gains on Friday.

At 9:40 a.m. ET, the Dow Jones Industrial Average rose 68.08 points, or 0.17%, to 39,580.92, the S&P 500 gained 3.32 points, or 0.06%, to 5 226.28 and the Nasdaq Composite gained 13.76 points, or 0.08%, to 16,354.63.

Alphabet lost 2.2% as Microsoft-backed OpenAI appeared set to announce its artificial intelligence (AI)-based search product on Monday.

The fall of Google’s parent company sent communications services stocks down 1.3%, lagging other S&P 500 sectors.

Apple gained 1% after a report Friday said the company had reached a deal with OpenAI, the maker of ChatGPT, to use the startup’s technology on the iPhone.

Arm Holdings climbed 5% after Nikkei Asia reported that the SoftBank Group-backed chip designer plans to develop artificial intelligence chips, seeking to launch the first products in 2025.

Rising stocks outnumbered falling stocks by a ratio of 3.86 to 1 on the NYSE and 2.75 to 1 on the Nasdaq.

The S&P 500 recorded 22 new 52-week highs and no new lows, while the Nasdaq recorded 84 new highs and 25 new lows.

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