US stocks edge higher; caution of key inflation release, earnings.
U.S. stocks edged higher Monday, rebounding after last week’s selloff with investors nervously awaiting the release of the latest inflation reading as well as the start of the first-quarter earnings season.
At 09:35 ET (13:35 GMT), Dow Jones Industrial Average rose 65 points or 0.2%, S&P 500 gained 5 points or 0.1%, and NASDAQ Composite rose 30 points or 0.2%.
Wall Street has started the new week on a positive note, continuing Friday’s gains that followed a stronger-than-expected nonfarm payrolls release, rebounding as the week as a whole saw sharp losses as investors drastically scaled back expectations that the Federal Reserve will cut interest rates by as soon as June.
March CPI looms large
The focus is now squarely on the consumer price index data for March, due on Wednesday. The reading is expected to show some cooling in core inflation, which strips out volatile food and fuel costs, but the expected annual figure of 3.7%, down from 3.8% the prior month, is still likely to remain well above the Federal Reserve’s 2% annual target.
The reading also comes after repeated warnings from Fed officials that sticky inflation will delay interest rates early in 2024.
The minutes of the Fed’s March meeting are due on Wednesday, and are also expected to provide more cues on potential rate cuts.
The hawkish comments from Fed officials, as well as Friday’s red hot payrolls number, have resulted in traders reducing expectations for a rate cut in June. Traders now see a roughly 51% chance for a 25 basis point cut in June, according to the CME Fedwatch tool.
Q1 earnings begin, bank results on tap
This week also sees the start of the first-quarter earnings season, which will provide evidence to gauge whether major U.S. stocks can justify a recent run-up in valuations. Wall Street indexes were all trading about 10% higher so far in 2024, and were sitting close to record highs.
Major U.S. lenders JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC) will report earnings on Friday.
Delta Air Lines (NYSE:DAL) and top asset manager BlackRock (NYSE:BLK) will also provide quarterly updates during the week.
Elsewhere, Boeing stock fell 0.5% after an engine cover on a Southwest Airlines (NYSE:LUV) aircraft – a Boeing 737-800 – fell off during takeoff in Denver and struck the wing flap, adding to the aircraft manufacturer’s recent malfunction issues.
Crude drops as Middle East tensions lessen
Oil prices fell Monday on raised confidence of a possible ceasefire in the Israel-Hamas conflict, easing concerns of supply disruption from the oil-rich Middle East.
By 09:35 ET, the U.S. crude futures traded 0.1% lower at $86.82 a barrel, while the Brent contract dropped 0.% to $90.89 per barrel.
Teams from Israel and Hamas met in Egypt for renewed ceasefire talks, just days before the Eid holidays this week, while Israel pulled out some troops from southern Gaza.
The moves have resulted in a lessening of tensions in the region, and follow the U.S. urging Israel to tone down its offensive against Gaza over human rights violations.
Oil prices had surged to five-month highs last week amid expectations of tighter oil supplies.