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Wall St climbs with focus on inflation data, Fed decision

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By Shristi Achar A and Sruthi Shankar

(Reuters) – Wall Street’s main indexes rose on Monday, extending a recent rally, as investors awaited inflation data and the Federal Reserve’s interest rate decision this week, while Oracle hit a record high ahead of quarterly results later in the day.

The U.S. Labor Department’s consumer price index reading on Tuesday, first day of the Fed’s two-day meeting, is expected to show inflation cooled slightly in May but core prices likely remained sticky.

Traders see a 76% chance of the central bank holding rates at the 5%-5.25% range on Wednesday, while pricing in a 56% chance of a 25-basis-point increase in July, according to the CME Fedwatch tool.

“I expect this Fed meeting to be in line with market expectations, which is a pause and re-evaluation for the future that could change based on CPI data tomorrow,” said Dylan Kremer, co-chief investment officer of Certuity.

“There’s a chance that the Fed will stay data dependent. So we don’t necessarily think that a rate hike is off the table in the future, but for the near term we just see them staying steady.”

The benchmark S&P 500 notched gains for a fourth straight week on Friday, building on a 20% rise from its October 2022 lows, heralding the start of a new bull market as defined by some market participants.

A rally in megacap stocks, better-than-expected quarterly earnings and hopes that the Fed might be nearing the end of its monetary tightening cycle have lifted indexes in recent weeks.

Since last week, the rally has broadened to include more economically sensitive sectors such as energy and industrials, as well as small-cap stocks as data continues to show a resilient U.S. economy despite higher interest rates.

Goldman Sachs on Friday raised its year-end price target for the benchmark S&P 500 to 4,500 from 4,000, citing the broadening of the market rally.

The CBOE volatility index edged up after hitting pre-pandemic levels in the previous week, up 0.68 point at 14.51.

Oracle advanced 6.4% to hit an all-time high as J.P. Morgan hiked its price target to $109, ahead of the cloud and enterprise software firm’s fourth-quarter results later in the day.

Technology and consumer discretionary stocks led gains among the 11 major sectors of the S&P 500, while energy stocks fell 1.2%, tracking a decline in crude prices. [O/R]

At 12:13 p.m. ET, the Dow Jones Industrial Average was up 71.54 points, or 0.21%, at 33,948.32, the S&P 500 was up 15.50 points, or 0.36%, at 4,314.36, and the Nasdaq Composite was up 94.23 points, or 0.71%, at 13,353.37.

Nasdaq Inc slumped 13.5% after the exchange operator said it would buy software firm Adenza for $10.5 billion, which analysts called an expensive bet.

Biogen shares edged up 1.6% after a U.S. FDA panel of advisers unanimously backed its Alzheimer’s drug, Leqembi, raising hopes that a traditional approval for the treatment might not come with major new safety warnings.

Broadcom Inc gained 4.5% as the chipmaker is set to gain conditional EU antitrust approval for its $61 billion proposed acquisition of cloud computing firm VMware.

Advancing issues outnumbered decliners by a 1.09-to-1 ratio on the NYSE and a 1.37-to-1 ratio on the Nasdaq.

The S&P index recorded 12 new 52-week highs and three new lows, while the Nasdaq recorded 83 new highs and 52 new lows.

(Reporting by Shristi Achar A and Sruthi Shankar in Bengaluru; Editing by Vinay Dwivedi and Sriraj Kalluvila)

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