Wall Street rose Monday ahead of a key week for central banks around the world, sending the S&P 500 to its highest level in nearly a year. The benchmark rose 40.07 points (0.9%) to 4,338.93, its best close since April 2022. The Dow Jones Industrial Average rose 189.55, or 0.6%, to 34,066.33, while the Nasdaq composite rose 202.78, or 1.5%, to 13,461.92. The US stock market is cruising on optimism that the economy could avoid a recession and the Federal Reserve could slow its interest rate hikes. Traders expect the Fed to hold rates steady at its Wednesday meeting. It would be the first meeting in over a year without a rate hike.
Low rates are benefiting high-growth stocks, which dominated the market on Monday. Tech stocks drove more than half of the S&P 500’s rise, led by 1.5% advances from Microsoft and Apple. Carnival, meanwhile, rose 12.5% after analysts updated the stock on flat demand and price indicators. It eclipsed market losses, including the Nasdaq’s 11.8% decline. He announced a $10.5 billion cash and stock acquisition of risk management and regulatory software provider Adenza. The economy and financial markets would benefit from a Fed rate freeze. The Fed raised rates to their highest level since 2007 to curb inflation, triggering high-profile bank failures and a months-long slump in manufacturing.
Inflation data will also be released this week. Consumer prices rose 4.1% in May, experts expect to announce on Tuesday. That’s above the Fed’s 2% inflation target, although down from 4.9% in April and over 9% last June. Due to the highest inflation in 40 years a year ago, future price increases may not look so dire. According to Jonathan Golub, chief US equity strategist at Credit Suisse, inflation could drop to 3.2% in June. Wall Street traders still expect the Fed to hike rates in July, but much of that easing would be due to high prices. How far beyond? Rate hikes could put a strain on the US banking sector, putting the Fed in a bind. It still absorbs the rate hikes that pushed customers into money market funds. Higher rates devalued bonds that banks bought at cheap rates.
They think a June Fed break is near. Gapen said the Fed rarely raises rates when Wall Street expects a stay, but recent surprise hikes from Canada and Australia suggest upward movement is possible. If Tuesday’s inflation report beats expectations, that could change. This week, the Federal Reserve, European and Japanese central banks will discuss interest rates. The 10-year Treasury yield fell to 3.73% from 3.74% on Friday evening. It determines mortgage rates and other loan rates. The Fed-sensitive two-year Treasury rate fell from 4.60% to 4.57%. After Switzerland’s UBS completed its takeover of Credit Suisse in a government-organized bailout to preserve the country’s reputation as a global financial center and ease market turbulence, European indices edged higher. Asian stock indices fluctuated.