11-7-2023 (NEW YORK) U.S. stocks closed higher on Monday as market participants eagerly anticipated a series of inflation data releases scheduled for later in the week.
The Dow Jones Industrial Average advanced by 209.52 points, or 0.62 percent, reaching 33,944.40. The S&P 500 gained 10.58 points, or 0.24 percent, closing at 4,409.53. The Nasdaq Composite Index rose by 24.76 points, or 0.18 percent, settling at 13,685.48.
Among the primary S&P 500 sectors, seven closed in positive territory. Industrials and health led the gainers, climbing by 1.39 percent and 0.81 percent, respectively. On the other hand, communication services and utilities were the laggards, experiencing declines of 0.92 percent and 0.42 percent, respectively.
U.S. stocks initially struggled to find direction on Monday but surged higher during the final trading hours, buoyed by encouraging economic data from the previous week that propelled Treasury yields towards cycle highs. Investors were particularly focused on gaining insights into the Federal Reserve’s monetary policy stance, with upcoming inflation data taking center stage this week.
This Wednesday, the June consumer price index (CPI) report will be unveiled, followed by the producer price index (PPI) on Thursday.
An analysis published by UBS Global Wealth Management on Monday highlighted the significance of this week’s data, stating, “Investors will look to this week’s data highlight – the release of U.S. June CPI on Wednesday – for clues on how the Federal Reserve is navigating this balancing act. The consensus forecasts a 0.3 percent month-over-month gain in both headline and core measures, which would lead to a 3.1 percent year-over-year headline inflation rate and a 5.0 percent core rate. The latter would still be uncomfortably high for Fed Chair Jerome Powell, in our view.”
While eagerly anticipating the crucial inflation data, investors also digested a series of comments from Federal Reserve officials on Monday, which provided further insights into the Fed’s policy trajectory.
Federal Reserve Bank of San Francisco President Mary Daly remarked that the central bank will likely need to raise interest rates a “couple” more times this year. Cleveland Fed President Loretta Mester echoed the sentiment, stating that the Fed needs to raise interest rates “further” in order to combat inflation.
Meanwhile, Fed Vice Chair for Supervision Michael Barr acknowledged that the Fed still has work to do in terms of raising interest rates to a level that will effectively curb inflation.
In addition to the inflation data and central bank commentary, investors will be closely monitoring a flurry of quarterly reports this week.
