Stocks began the week on a positive note, but the futures are indicating a slightly negative open for the major U.S. indexes this morning. In overnight trading, markets in Asia ended mixed. Meanwhile, the major European indexes are also showing a lack of direction. Elsewhere, oil prices have moved higher, with West Texas Intermediate up about 1.2%, to around $88.30 a barrel.
After August’s market declines, investors are hoping for a bit of a reprieve. Unfortunately, September has historically been the worst month of the year for stocks. The Federal Reserve could provide a catalyst for a near-term rally when it concludes its Federal Open Market Committee (FOMC) meeting next Thursday. Wall Street is widely calling for the central bank to keep its overnight lending rate target at 5.25%-5.50%, and any hint of extending that pause would be welcome news for stocks.
However, that outlook may change depending on a few key economic reports due out this week. Tomorrow morning, the U.S. Bureau of Labor Statistics will release its Consumer Price Index (CPI) for August. Economists are calling for a slight uptick, with the month-to-month rate climbing to 0.6% (versus the 0.2% clocked in July), and the 12-month figure advancing to 3.6% (compared to 3.2% the month before). Thursday then brings the Producer Price Index (PPI) for last month. The consensus there is calling for a dip in the month-over-month rate (to 0.2%, versus 0.3% in July), while the year-to-year figure is expected to come in around 2.2% (down from 2.4% through July).
The Federal Reserve will also get to mull over retail sales figures for last month, which are also due on Thursday. There have been increased signs that U.S. consumer spending is bowing to pressures from rising borrowing rates and significantly higher product costs, with several companies lowering annual profit forecasts due to softening trends. As a result, the Street is calling for August’s report to show a decline from July’s 0.7% sequential increase and 12-month advance of 3.2%.
Summing up Monday’s price moves, the Dow Jones Industrials gained 87 points, or 0.3%, the S&P 500 climbed 29 points (0.7%), and the tech-focused NASDAQ finished up 156 points (1.1%). – 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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