NEW YORK: Wall Street’s main indexes rose on Monday, recovering losses from last week, as investors looked ahead to a key inflation report and commentary from a slew of Federal Reserve officials this week to gauge the central bank’s interest rate path.
All eyes will be on US inflation data, expected on Wednesday, that will feed into the Fed’s interest rate decision later in the month. A Reuters poll of economists showed they suspect that growth in consumer prices likely slowed in June.
“This week has the potential to tip short-term momentum either way, depending how traders react to inflation data (CPI and PPI) and the first batch of Q2 earnings,” said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley.
Citigroup strategists downgraded US stocks to “neutral”, adding that megacap growth is set for a pullback and US recession risks could still bite.
On Friday, Wall Street’s main indexes ended the week lower after a jobs report showed unemployment declined in June, while higher-than-anticipated wage growth pointed to a still strong labor market.
Traders still expect the US central bank to raise rates by 25 basis points later this month, but are divided on the rate hike trajectory for the rest of the year.
In three separate speeches on Monday, Fed policymakers including Michael Barr, Loretta Mester and Mary Daly reiterated the need for more rate hikes.
The second-quarter earnings season kicks off this week and investors will assess the impact of tight monetary conditions and fears of an impending economic slowdown on businesses.
Overall, earnings for the S&P 500 constituents are expected to fall 5.7% in the quarter, Refintiv data showed.
At 11:38 a.m. ET, the Dow Jones Industrial Average was up 157.52 points, or 0.47%, at 33,892.40, the S&P 500 was up 4.94 points, or 0.11%, at 4,403.89, and the Nasdaq Composite was up 4.62 points, or 0.03%, at 13,665.34. Five out of the 11 major S&P 500 sectors advanced, with industrials leading gains, rising 1.1%.
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