NEW YORK: US stock indexes edged higher on Monday, with oil stocks gaining after mounting attacks in the Red Sea lifted crude prices, while shares of US Steel rocketed after a $14.9 billion buyout deal.
The main Wall Street indexes are looking to end 2023 on a high note as signs of slowing inflation boosted expectations that the US central bank will soon ease its monetary policy.
The blue-chip Dow hit an all-time high for the fourth consecutive session, while the benchmark S&P 500 is nearly 1% away from its highest closing level it hit in January 2022. Oil majors Chevron climbed 0.8% and Exxon Mobil added 1.7% as crude prices rallied nearly 3% as mounting attacks by the Yemeni Houthis on ships in the Red Sea disrupted maritime trade and raised concern of supply disruption.
The S&P 500 energy sub-index climbed 1.5%, and was among top-gainers among the 11 major S&P sectors, but is still the only major sector on course for losses quarter-to-date, down nearly 7%.
“Commodities in general have sold off a good bit this year, which has helped the CPI number continue to move down,” said Alex McGrath, CIO a for NorthEnd Private Wealth. “But if you get a sustained rise in energy prices, it just keeps that CPI number stickier than the Fed would want it to be, and that could put (interest rate) cuts down the road further away.” Meanwhile, United States Steel surged 27.1% to an over 12-year high after Japan’s Nippon Steel said it would buy the steelmaker in a $14.9 billion deal including debt.
Later in the week, investors will focus on economic data including the personal consumption expenditure index (PCE) - the Fed’s preferred inflation gauge - weekly jobless claims, housing starts and the final reading of the third-quarter GDP report to gauge the path of US interest rates.
Traders are currently pricing in a 70% chance that the Fed will cut interest rates at least by 25 basis points in March, according to CME Group’s FedWatch tool, even as top Fed policymakers pushed back on the ebullience.
Chicago Fed President Austan Goolsbee said the US central bank is not precommiting to cutting interest rates soon and swiftly.
At 11:48 a.m. ET, the Dow Jones Industrial Average was up 58.80 points, or 0.16%, at 37,363.96, the S&P 500 was up 21.49 points, or 0.46%, at 4,740.68, and the Nasdaq Composite was up 59.46 points, or 0.40%, at 14,873.38.
Goldman Sachs raised its forecast for the S&P 500, which it now sees ending 2024 at 5,100, while decelerating inflation and Fed easing would keep real yields low.
Among other stocks, Apple slipped 1.4% after more Chinese agencies and state-backed companies asked their staff to not bring iPhones and other foreign devices to work, a report said.
VF Corp tumbled 7.5% after the Vans sneaker maker said it was investigating “unauthorized” activity on its computer systems, an incident that was likely to have a material impact on its business.
Advancing issues outnumbered decliners by a 1.15-to-1 ratio on the NYSE and for a 1.10-to-1 ratio on the Nasdaq.
The S&P index recorded 25 new 52-week highs and two new lows, while the Nasdaq recorded 95 new highs and 71 new lows.
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