US stocks rose in choppy trading as investors focused on midterm elections and inflation readings later this week. The dollar fell with Treasuries.
(Bloomberg) — US stocks rose in choppy trading as investors focused on midterm elections and inflation readings later this week. The dollar fell with Treasuries.
The S&P 500 ticked higher amid gains in eight of the 11 industry groups. The tech-heavy Nasdaq 100 also caught bids, while the Dow Jones Industrial Average outperformed, with health-care names topping the leaderboard.
Facebook parent Meta Platforms Inc. advanced on plans for job cuts. Apple Inc. fell after a report saying it expected to produce at least three million fewer iPhone 14 handsets than originally anticipated this year.
Stocks are poised for a second day of gains ahead of US midterms. Morgan Stanley’s Michael Wilson said polls pointing to Republicans winning at least one chamber of Congress provide a potential catalyst for lower bond yields and higher equity prices.
“Has the stock market been voting early?” said Ed Yardeni, founder of his namesake research firm, referring to the S&P 500 bounce back from an October low. “Tomorrow’s midterm elections may further boost stock prices in coming months if history is a guide. Our soft-landing economic outlook, if it pans out (60% subjective odds), may be another wind at the stock market’s back.”
Read more: Wall Street Hopes History Repeats With a Post-Election Comeback
Optimism, for the moment, is outweighing concerns over the Federal Reserve’s resolute campaign against price surges, signs of stress in US corporate performance and China’s announcement it will “unswervingly” adhere to current Covid Zero policy.
Stocks rose on Friday, paring the biggest weekly drop in the S&P 500 since September, after data showed strong hiring and wage increases along with higher unemployment. That offered a mixed picture for Fed officials debating how long to extend their campaign to curb elevated inflation.
Swaps markets are leaning toward a 50 basis-point Fed rate increase in December, after a fourth consecutive jumbo hike to a target range of 3.75% to 4% at last week’s meeting. Rates are expected to peak slightly above 5% around mid-2023.
The latest US inflation reading due Thursday will be closely watched after the core consumer price index rose more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the Fed’s comfort zone.
“Since we might not know the answer to what the makeup of Congress will be this week, Thursday’s CPI number will be very important once again,” Matt Maley, chief market strategist at Miller Tabak + Co., said in a note. “Even if we get a better-than-expected CPI number later this week, the odds that it will only create a very short-term bounce are high. Before long, the stock market should roll-over once again.”
Key events this week:
- Fed officials Susan Collins, Loretta Mester and Tom Barkin speak at events, Monday
- Euro-zone retail sales, Tuesday
- US midterm elections, Tuesday
- EIA oil inventory report, Wednesday
- China aggregate financing, PPI, CPI, money supply, new yuan loans, Wednesday
- US wholesale inventories, MBA mortgage applications, Wednesday
- Fed officials John Williams, Tom Barkin speak at events, Wednesday
- US CPI, US initial jobless claims, Thursday
- Fed officials Lorie Logan, Esther George, Loretta Mester speak at events, Thursday
- US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.4% as of 1:19 p.m. New York time
- The Nasdaq 100 rose 0.3%
- The Dow Jones Industrial Average rose 0.9%
- The MSCI World index rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index fell 0.4%
- The euro rose 0.7% to $1.0023
- The British pound rose 1.2% to $1.1518
- The Japanese yen was little changed at 146.51 per dollar
Cryptocurrencies
- Bitcoin fell 2% to $20,697.97
- Ether fell 1% to $1,587.47
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.19%
- Germany’s 10-year yield advanced five basis points to 2.34%
- Britain’s 10-year yield advanced 10 basis points to 3.64%
Commodities
- West Texas Intermediate crude fell 0.4% to $92.25 a barrel
- Gold futures rose 0.2% to $1,679.30 an ounce
–With assistance from Michael G. Wilson, Tassia Sipahutar, Srinivasan Sivabalan and Isabelle Lee.
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