Frankvanden Berg
On Monday, US stocks struggled for direction before finally ending in positive territory, as market participants geared up for a busy week with key inflation data, a lineup of Federal Reserve speakers and the start of second-quarter earnings. season.
Nasdaq Technology Heavy Composite (COMP. IND) I finish 0.18% increase at 13685.48 points. S&P 500 Standard (SP500) added 0.24% to settle at 4,409.72 points, while the excellent Dow Index (DJI) advance 0.63% To close at 33946.25 points.
Of the 11 S&P sectors, seven finished in the green, led by industry and health care. Services and communication facilities topped the losers.
Treasury yields were lower. The longer 10-year yield (US10Y) fell 4 basis points to 4.01% while the more rate-sensitive 2-year yield (US2Y) fell 6 basis points to 4.87%.
“Major stock indices started a pivotal week for the Fed with a largely flat session. The Nasdaq 100 (NDX) has announced a weighting rebalancing that will significantly reduce provisioning in these tech giants,” said Ahan Vashi, head of the investment group at The Quantamental. Investor, for the alpha search site.
Wall Street’s major averages on Friday closed the first week of July on a negative note, as concerns surrounding the future direction of the Federal Reserve’s monetary policy along with mixed economic data in the jobs market weighed on sentiment.
This week, investors will receive the June Consumer Price Index (CPI) report on Wednesday. Economists expect the headline number to fall to 3.0% from 4.0% in May and the core inflation rate to 5.0% from 5.3% in May.
Consumer inflation data is likely to play an important role in determining the outcome of the Federal Reserve’s Monetary Policy Committee meeting later this month. According to the CME FedWatch tool, the markets are currently pricing in a probability of 92% on a 25 basis point increase by a central bank.
“While core June CPI inflation is expected to come in at 3-3.2%, the Fed is still likely to raise interest rates by another 25 basis points this week. In our view, a 25 basis point increase has already been priced in. In the market, however, Jerome Powell’s commentary on future monetary policy could significantly influence near-term price action in the stock and bond markets.With the 10-year Treasury yield exceeding 4% in recent sessions, investors should remain cautious about equities. The quantitative investor added.
San Francisco Fed President Mary Daly said at an event Monday that there is a need to raise interest rates twice by the end of the year. Daley is among a number of federal speakers scheduled to make comments this week.
Earnings season is also back in focus, with second-quarter reports starting to come out this week. JPMorgan (JPM), Citigroup (C), and Morgan Stanley will be highlighted, which will be among the first major banks to announce their financial numbers. Their management’s comments will be watched especially, after the failure of the regional banks earlier this year.
Turning to the economic calendar on Monday, Wholesale Inventories for May came in flat at $913.7 billion compared to economists’ expectations of a 0.1% move. In addition, the New York Fed’s survey of consumer expectations in June showed a decline in inflation expectations for the coming year for the third month in a row, while falling to its lowest reading since April 2021.
Among active stocks, FMC (FMC) closed as the top loser on the S&P 500 (SP500) after the chemical maker cut its guidance, citing inventory-cutting issues.