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Updated at 4:15 PM EST
Equities finished mixed on Monday as the dollar continued its decline in currency markets as investors looked to build on last week’s job gains ahead of key inflation data expected in the coming days.
The Dow Jones Industrial Average finished up 112 points, or 0.34%, to 35,517, while the S&P 500 fell 0.8% and the tech-focused Nasdaq gained 0.63%.
Stocks received a late-morning boost from the New York Fed’s December inflation expectations, released Monday, which showed full-year CPI guidance at 5%, down from 5.2% in November and the lowest since July 2021.
Hawkish comments from Federal Reserve speakers, including San Francisco Fed President Mary Daly and Atlanta Fed President Raphael Bostic, held back momentum in the stock market until the end of the session .
Daly told the Wall Street Journal she could make “both sides” arguments in the debate over whether a 25 basis point or 50 basis point rate hike would be appropriate for the Fed later this month, stressing the need to ensure that the inflation does not rise. not become embedded in the economy.
Friday’s better-than-expected jobs report, which showed solid gains of 223,000 in net new positions alongside moderating wage growth, led to the strongest one-day gains for the S&P 500 in more than a month as Treasury yields fell sharply and the dollar shed gains against its global peers as investors revised expectations for Fed rate hikes in hopes of slowing inflation.
The initial contraction for the ISM services sector survey, a crucial reading of activity in the economy’s main growth engine, added to Friday’s gains as bets on a smaller 25 basis point rate hike by the Fed rose to about 80 on Feb. .2%, according to CME Group’s FedWatch.
Growth concerns will dampen some of those gains early in the week, with investors eyeing Thursday’s December inflation report and the unofficial start of third-quarter earnings season on Friday, but a weaker dollar and lower government bond yields , coupled with an improving inflation forecast as it gives US and global equities an early boost.
Powell’s speech from Fed Chairman Jerome at a conference of central banks in Sweden, just two days ahead of a major lecture on domestic inflation, will mark a relatively quiet week of Wall Street economic releases heading into the start of the recession. quarterly earnings season.
Powell, who will address the Sveriges Riksbank International Symposium on Central Bank Independence in Stockholm on Tuesday at 9:00 a.m. EST, can comment on last week’s “goldilocks” jobs report, which showed firmer-than-expected hiring in December, combined with moderate wage growth.
If Powell, who has refuted market expectations for easing rate hikes in recent months, lets the current consensus feed into Thursday’s inflation reading, stocks have a chance to build significant gains in the two weeks between now and Fed policy from February 1. decision.
Thursday’s CPI reading is expected to show headline inflation falling to 6.5% in December from 7.1% in November, with so-called core consumer price pressures – which take away food and energy costs – easing to an annualized percentage of 5.7%.
Benchmark 2-year Treasury yields last fell to 4.199% in late trading in New York, with 10-year bonds falling to 3.532%, while the US dollar index, which tracks the greenback against a basket of its global counterparts, fell 0.67. % to 103.18.
In overseas markets, China’s reopening of the Hong Kong border after more than three years, along with the easing of further restrictions on travel and business in the Covid era, lifted Asian stocks sharply higher, with the region-wide MSCI ex -Japan index rose by 2.43%. until the end of the trade.
European equities were also higher, with the Stoxx 600 extending gains from its best week in nine months to 0.88% higher in Frankfurt trading, driven by last week’s softer-than-expected inflation data that challenged some of the more aggressive expectations of the European central bank.
Oil prices also rose on bets that reopenings would fuel demand for commodities, while copper prices hit six-month highs.
Brent crude contracts for March delivery, the global benchmark, were last seen up $1.18 during the session at $79.75 a barrel, while February WTI futures, which are more closely tied to US gas prices, $1.05 rose to $74.82 a barrel.
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