US stocks rose as investors await the next batch of earnings from some of the world’s biggest companies and mull whether the Federal Reserve will slow its pace of interest-rate hikes after assessing weak economic data.
Treasuries fell.
(Bloomberg) — US stocks rose as investors await the next batch of earnings from some of the world’s biggest companies and mull whether the Federal Reserve will slow its pace of interest-rate hikes after assessing weak economic data.
Treasuries fell.
The S&P 500 climbed, buoyed by health-care companies. The Nasdaq 100 wavered, paring losses of more than 1%. US-listed Chinese shares plunged after that nation’s equity index tumbled as President Xi Jinping solidified his power.
Among the megacap companies slated to report earnings this week are Alphabet Inc., Microsoft Corp. and Meta Platforms Inc.
Risk assets struggled to hold gains in a carryover from Friday, when reports that the Federal Reserve may soon start reducing the size of its rate hikes pushed stocks higher by more than 2%.
Data Monday indicated that Fed tightening is starting to hit the economy, with purchasing managers indicators showing contraction in the services and manufacturing sectors. Earnings remain in focus, with investors on edge over whether companies can deliver profits with inflation crimping margins.
“Earnings season is just starting, but so far, with 20% of the companies in (notably big banks), the results, are once again, affirming that the broader earnings picture is not falling apart,” wrote Michael Purves, founder and CEO of Tallbacken Capital.
“Big tech earnings is the story this week, and given the outsized weighting in the index, we can’t stress how important it is they perform reasonably well.”
Fed policy is still a key focus for investors.
San Francisco Fed President Mary Daly’s comments on Friday added to tentative optimism that the central bank could look to slow its pace of rate hikes after the widely-expected jumbo increase at its next meeting.
“In our view we’re certainly ‘not out of the woods yet’ but the efforts of the Fed since it pivoted policy to address inflation along with the resilience of the economy in a challenging period — and some rumbling among Fed speakers that while the rate hike in November may indeed be 75bps, the Fed may not have to be quite as heavy handed in December — have caught the attention of market participants,” wrote John Stoltzfus, chief investment strategist at Oppenheimer.
Other investors are more cautious in their expectations that the central bank is moderating its rhetoric.
“While it is encouraging that Fed officials have started to point to an end in sight for rate rises, such a pause will remain conditional on fading inflation and a cooling labor market,” wrote Mark Haefele, chief investment officer at UBS Global Wealth Management.
“This has yet to be seen in the data.”
A gauge of the dollar strength rose while the yen dropped amid signs of a second intervention from Japanese authorities in two sessions. British bonds held onto gains, with Rishi Sunak now set to become prime minister.
Key events this week:
- Earnings due this week include: Apple, Microsoft, Exxon Mobil, Ford Motor, Credit Suisse, Airbus, Alphabet, Amazon, Bank of China, Boeing, Caterpillar, Cnooc, Coca-Cola, HSBC, Intel, McDonald’s, Mercedes-Benz, Merck, Samsung Electronics, Shell, UBS, UPS, Vale, Visa, Volkswagen
- PMIs for US, Monday
- US Conference Board consumer confidence, Tuesday
- Bank of Canada rate decision, Wednesday
- ECB rate decision, Thursday
- US GDP, durable goods orders, initial jobless claims, Thursday
- Bank of Japan policy decision, Friday
- US personal income, personal spending, pending home sales, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.5% as of 11:09 a.m.
New York time
- The Nasdaq 100 fell 0.2%
- The Dow Jones Industrial Average rose 0.9%
- The Stoxx Europe 600 rose 1.4%
- The MSCI World index rose 1.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro rose 0.2% to $0.9880
- The British pound was little changed at $1.1298
- The Japanese yen fell 0.8% to 148.85 per dollar
Cryptocurrencies
- Bitcoin fell 1.2% to $19,261.27
- Ether rose 0.4% to $1,335.65
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.25%
- Germany’s 10-year yield declined eight basis points to 2.34%
- Britain’s 10-year yield declined 31 basis points to 3.74%
Commodities
- West Texas Intermediate crude was little changed
- Gold futures fell 0.3% to $1,651.90 an ounce
–With assistance from Charlotte Yang, Brett Miller and Robert Brand.
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