U.S. stocks rose Monday, as investors awaited inflation data due later this week that would feed into their assessments of where monetary policy is headed.
The S&P 500 gained 0.6%, and the Dow Jones Industrial Average rose 155 points, or 0.5%. The Nasdaq Composite climbed 0.8%.
On Tuesday, the Labor Department is set to release January’s consumer-price index reading, a closely watched measure of what consumers pay for goods and services. Stocks have gained this year, with the S&P 500 up 6.5% as of Friday, as investors broadly expect inflation to continue moderating, though some are wary that inflation could settle above the Federal Reserve’s target.
“The key thing here is at what level will inflation begin to stabilize,” said
head of equity strategy at Saxo Bank. “If these inflationary factors are persistent, then the Fed will be in a position where they have to do more or keep rates up longer than the market is pricing.”
Higher interest rates typically hurt stocks as investors can buy safer assets such as Treasurys for returns. The effect is particularly felt by technology stocks, whose value is heavily dependent on expected growth, as higher interest rates make future profits appear less valuable in today’s money.
While the busiest phase of fourth-quarter earnings season is over, several big companies are due to report later this week, including
So far this year, a higher-than-usual share of companies has missed consensus sales and profit forecasts, according to FactSet. Overall, quarterly profits are set to fall 4.9% year-over-year, marking the first such shrinkage since 2020, its analysis shows.
In bond markets, the yield on the 10-year U.S. Treasury note ticked down to 3.734%, from 3.743% Friday.
In energy markets, Brent crude, the international benchmark, fell 0.6% to $85.80 a barrel.
Overseas, the pan-continental Stoxx Europe 600 gained 0.6%. In Asia, major indexes closed with mixed performance. China’s Shanghai Composite rose 0.7%, while South Korea’s Kospi Composite declined 0.7% and Japan’s Nikkei 225 fell 0.9%.
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