narvik
US stocks advanced on Monday, recouping some of last week’s losses, as market participants placed their bets ahead of Tuesday’s highly anticipated US consumer price index report.
At midday, the Nasdaq Composite (COMP.IND) had jumped 1.38% to 11,879.33 points, helped by a jump in Microsoft shares (MSFT) and Meta (META).
The benchmark S&P 500 index (SP500) was 0.93% higher at 4,128.43 points, while the blue chip Dow Jones (DJI) added 0.86% at 34,159.53 points.
All 11 S&P sectors – with the exception of energy – were trading in the green, led by technology and consumer discretionary.
The dizzying 2023 rally in markets came to a halt last week, with all three major indices posting losses. It was the benchmark S&P 500 worst weekly performance year so far as sentiment was dampened by lingering concerns surrounding the Federal Reserve.
Tuesday’s CPI report will give an idea of the state of inflation and will undoubtedly lay the foundation for the Fed’s monetary policy going forward. Headline CPI for January is expected to post a 0.5% M/M increase, compared to last month’s decline. On a Y/Y basis, headline CPI is expected to dip to 6.2%, with the base rate falling to 5.5%.
“Tomorrow, the most romantic day of the year, the financial community’s pheromones could be dictated by a pretty big print from the US CPI,” Deutsche Bank’s Jim Reid said. “It feels like yesterday that US inflation numbers were considered last year’s news given the recent dips. Additionally, forecasts and break-evens suggested we were on the edge. path to normal over the next few months and quarters…received a minor jolt over the past 10 days.”
“First we had pay slips printed, which raised the possibility that ex-safe haven basic services could stay stronger for longer. Then we had a lot of hawkish talk from the central bank that the market had previously ignored but were now slowly waking up.Next, Manheim suggested that US car use (+2.5% m/m in January) climbed at its fastest rate in 14 months and we finally have had revisions to the U.S. CPI on Friday that rewrote the last year in history and, in turn, cut underlying inflation by about a tenth each month before June and raised it on average by about a tenth every month since August,” Reid added.
The economic calendar is light on Monday, but the week will be busy. Along with Tuesday’s CPI report, traders will also receive PPI data, retail sales figures and industrial production figures this week.
Turning to fixed income markets, Treasury returns were mixed on Monday. The 10-year Treasury yield (US10Y) fell 1 basis point to 3.73%, while the 2-year yield (US2Y) rose 3 basis points to 4.54%.
Among active stocks, Fidelity National Information Services (FIS) was the best loser percentage on the S&P 500 (SP500) after issuing weak guidelines and unveiling a plan to spin off one of its businesses.
Blue apron (APRN) fell after announcing a Offer of $70 million after hours on Friday.