Stocks rose on Monday after a morning of choppy trading and after the S&P 500 posted its biggest weekly gain in almost five months on the back of easing inflation data.
The Dow Jones Industrial Average rose 150 points, or 0.5%. The S&P 500 advanced 0.3% and the tech-heavy Nasdaq Composite traded just above the flat line.
The market struggled for direction throughout the session but turned higher in the afternoon, lifted by health sector gains.
“This week marks a bit of an information lull for markets as we’re past the brunt of third quarter earnings season, past the end-of-month/start-of-month economic data deluge, the busy holiday season is about to start, and we’re a mere seven weeks away from 2023,” said Goldman Sachs’ Chris Hussey. “But on the back of last Thursday’s encouraging CPI release, markets are contemplating the macro outlook, the possibility that inflation may have finally peaked, the path for rates from here, as well as the possibility of a recession.”
Earlier, the major stock indexes came off their lows after Federal Reserve Vice Chair Lael Brainard made comments Monday indicating that the central bank could soon slow the pace of its interest rate increases, and providing some comfort to the market.
Her comments came after Fed Governor Christopher Waller said Sunday: “We’re at a point we can start thinking maybe of going to a slower pace.” But, “we’re not softening. … Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there.” His remarks initially weighed on the market heading into the week.
Ahead of Brainard’s comments, stocks briefly fell to near session lows following news that Amazon will lay off about 10,000 employees as early as this week. Around the same time of the report, a Federal Reserve survey showed consumers’ inflation expectations for the year ahead rose, weighing further on sentiment.
“The mood of investors is cautiously optimistic,” Sylvia Jablonski, CEO and chief investment officer of Defiance ETFs, told CNBC. “The general sentiment I’m hearing out there is that traders are more likely to expect a sustainable run from this point on — maybe it won’t be the face ripper that we hope for but sustainable upside — through the end of the year before we hit 2023 and you start to really see what the Fed hikes have done to the economy and how fragile our earnings are.”
The S&P 500 rallied 5.9% to finish the previous week, its best weekly advance since June. Investors cheered a lighter-than-expected inflation reading, betting that the Federal Reserve would soon slow its aggressive tightening campaign. The tech-heavy Nasdaq Composite gained 8.1% last week for its best week since March. The blue-chip Dow advanced 4.2%.
The third-quarter earnings season is set to continue, with a heavy emphasis on retail. Big retailers Walmart, Home Depot, Target, Lowe’s, Macy’s and Kohl’s are all slated to post numbers this week.
