Wall Street built upon Friday’s advance by gaining more ground Monday. The Dow Jones Industrial Average jumped 417 points, or 1.3%, marking its highest close since September 12th. The S&P 500 advanced 44 points (1.2%), and the tech-focused NASDAQ moved up 92 points, or 0.9%.
Meanwhile, earnings season is in full swing, and large-cap tech stocks, which have taken a big hit this year, will be in the spotlight this week, with Alphabet (GOOG) and Microsoft (MSFT) scheduled to report today, followed by Meta Platforms (META) on Wednesday, and Amazon.com (AMZN) and Apple (AAPL) on Thursday.
So far, earnings announcements have generally been favorable, but that’s partly due to Corporate America (faced with rising interest rates, a strong dollar, high inflation, and the threat of a looming recession) having managed expectations lower.
More likely, the recent rally reflects growing optimism that the Federal Reserve may soon ease back on the size of its interest-rate hikes. For now, another 0.75 percentage point increase appears to be a given at the Federal Open Market Committee’s meeting next week, which would lift the target rate to a range of 3.75% to 4.0%. However, in recent weeks, some Fed officials have been suggesting that there should be some sort of reassessment once the rate exceeds 4.5%. Whether or not that proves to be the “pivot point” that the market is looking for remains to be seen.
On the economic calendar for this week, the Federal Housing Finance Agency (FHFA) will release its home price index for August this morning, which will be followed by the report on new home sales for September tomorrow. Thursday brings the first estimate for third-quarter gross domestic product, or GDP, with the U.S. economy widely expected to snap the losing streak registered in the first two stanzas of the year. However, Friday’s report on the Personal Consumption Expenditures price index (PCE) for September is arguably the most eagerly awaited of the lot, largely on the hope that the high rate of inflation is losing some steam.
Just a little before the start of today’s trading session, U.S. stock futures are indicating a negative open for the major indexes. In overnight trading, Asian markets were mixed but with a bias to the upside. Meanwhile, stocks in Europe are mostly down. Elsewhere, oil futures have slipped about half a percentage point, to about $84 a barrel. – Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
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