Wall St. waits for inflation report
U.S. stock indexes held roughly in place Monday ahead of an inflation report that could show how realistic Wall Street’s hopes are for easier interest rates.
The Standard & Poor’s 500 index slipped 5.75 points, or 0.1%, to 5,117.94, coming off just its third losing week in the last 19. It’s still near its all-time high set Thursday, buoyed by expectations that cuts to interest rates are coming this year and by signals that the economy remains remarkably resilient.
The Dow Jones industrial average rose 46.97 points, or 0.1%, to 38,769.66, and the Nasdaq composite fell 65.84 points, or 0.4%, to 16,019.27.
Tuesday’s report on prices at the consumer level could show inflation remained at 3.1% in February, if economists’ forecasts are correct.
A month ago, a hotter than-expected report on inflation at the consumer level sent financial markets spinning after scrambling bets for when the Federal Reserve will start cutting rates. Stocks have already run higher and Treasury yields have eased in the bond market on expectations that such cuts are coming.
But the trend for inflation has been mostly downward, cooling toward the Fed’s 2% target from its peak above 9%. Fed Chair Jerome H. Powell said last week that the Fed is “not far” from getting enough confidence about inflation to begin cutting rates. Cuts to the Fed’s main interest rate, which is at its highest level since 2001, would relax pressure on the economy and financial system, while goosing investment prices.
The general expectation among traders is that the Fed will begin cutting rates in June.
It’s such expectations that have helped drive the U.S. stock market’s big run since late October, according to Michael Wilson and other strategists at Morgan Stanley. From here, though, “the burden is now likely on earnings/fundamentals to show more material improvement” for the rally to continue.
This most recent earnings reporting season has mostly wrapped up, but Archer Daniels Midland and Ulta Beauty are among the S&P 500 companies reporting this week.
Expectations for easier interest rates have helped the price of gold rally to a record. When bonds pay less in interest, investors lose out on less income by owning gold instead. Gold for delivery in April ticked up by $3.10 to settle at $2,188.60 per ounce. Gold prices are up about 17% over the last 12 months.
Bitcoin, which proponents sometimes pitch as “digital gold,” also rallied to a record. It rose above $72,000 after sitting below $17,000 at the start of last year. It’s more than bounced back from its prior peak of nearly $69,000.
On Wall Street, Oracle rose 1.5% before it released its latest earnings report after trading finished for the day. Its profit topped analysts’ expectations, and its stock rose more in afterhours trading.
On the losing end was natural-gas producer EQT, which sank 7.8% for the biggest drop in the S&P 500. It said it will buy Equitrans Midstream and its gas transmission and storage systems in an all-stock deal that values the combined company at $35 billion. Equitrans Midstream rose 1.5%.
Nvidia swung through a shaky day. It is still up more than 70% this year after tripling last year amid a frenzy on Wall Street around artificial intelligence technology. Its stock dropped 2% Monday to act as one of the heaviest weights on the S&P 500.
Reddit said it may raise as much as $748 million through the sale of stock to investors on an exchange for the first time. The social media company expects its stock to trade under the “RDDT” ticker symbol.
In the bond market, yields edged higher. The yield on the 10-year Treasury rose to 4.09% from 4.08% late Friday.
In stock markets abroad, indexes were mostly lower across much of Europe and Asia.