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U.S. stocks on Monday advanced, clawing back some of last week’s losses, as market participants placed their bets ahead of Tuesday’s highly anticipated U.S. consumer price index report.
The tech-heavy Nasdaq Composite (COMP.IND) surged 1.34% to 11,875.03 points in morning trade, helped by a jump in shares of Microsoft (MSFT) and Meta (META).
The benchmark S&P 500 (SP500) was 0.91% higher to 4,127.62 points, while the blue-chip Dow (DJI) added 0.79% to 34,136.11 points.
All 11 S&P sectors – with the exception of Energy – were trading in the green, led by Technology and Consumer Discretionary.
2023’s breakneck rally in the markets took a breather last week, with all three major indices posting losses. It was the benchmark S&P 500’s worst weekly performance of the new year so far, as sentiment was dampened by lingering concerns surrounding the Federal Reserve.
Tuesday’s CPI report will give an idea about the state of inflation and will no doubt lay the groundwork for the Fed’s monetary policy going forward. January headline CPI is anticipated to show a 0.5% M/M rise, compared to last month’s decline. On a Y/Y basis, headline CPI is expected to dip to 6.2%, with the core rate dropping to 5.5%.
“On the most romantic day of the year tomorrow, the pheromones in the financial community might be dictated by a pretty important US CPI print,” Deutsche Bank’s Jim Reid said. “It only feels like yesterday that US inflation prints were seen as last year’s news given the recent falls. In addition, forecasts and breakevens suggested we were on a glide path to normality over the next few months and quarters … However that view has received a bit of a jolt in the last 10 days.”
“First we had payrolls print which raised the prospect that core services ex-shelter could stay stronger for longer. Then we had lots of hawkish central bank speak that the market had previously ignored but was now slowly waking up to. Then Manheim suggested US used cars (+2.5% mom in January) climbed at their fastest rate for 14-months and finally we had US CPI revisions on Friday that have rewritten the last year of history and in turn reduced core inflation by around a tenth each month leading up to June and have increased it by an average of around a tenth in each month since August,” Reid added.
The economic calendar is light on Monday, but the week will be busy. Other than the CPI report on Tuesday, traders will also be getting PPI data, retail sales numbers and industrial production figures this week.
Turning to the fixed income markets, Treasury yields were mixed on Monday. The 10-year Treasury yield (US10Y) was down 1 basis point to 3.73%, while the 2-year yield (US2Y) rose 4 basis points to 4.55%.
Among active stocks, Fidelity National Information Services (FIS) was the top percentage loser on the S&P 500 (SP500) after issuing weak guidance and unveiling a plan to spinoff one of its businesses.
Blue Apron (APRN) tumbled after announcing a $70M offering after hours on Friday.
