Stock rally gathers pace as investors await CPI report

US stocks rose on Monday as Wall Street edged closer to this week’s long-awaited inflation numbers.

The S&P 500 rose 1%, while the Dow Jones Industrial Average jumped nearly 250 points, or 0.8%. The tech-heavy Nasdaq Composite led the way, rising 1.2% in afternoon trade. The moves come after all three major averages posted weekly gains for the first time in three weeks: The S&P 500 and Nasdaq each rose more than 4% during the holiday-shortened week, while the Dow rose 3.2%.

In commodities, oil prices rose, extending a streak of recent back-and-forth action. West Texas Intermediate (WTI) and Brent crude futures each rose about 1.2% to $87.84 a barrel, respectively. barrel and $93.95 per barrel.

All eyes are on the August consumer price index (CPI), which will be released before markets open on Tuesday.

Economists surveyed by Bloomberg expected headline CPI to rise 8.1% from a year earlier in August, a slowdown from an 8.5% rise in July. On a month-on-month basis, the CPI is expected to show that prices fell 0.1% from July to August, mainly due to continued easing in energy prices. If realized, this would mark the first monthly decline since May 2020.

Core CPI, which strips out the report’s volatile food and energy components and is closely watched by the Fed, is likely to have edged higher in August, rising 6.1% from the same month last year, more than the 5.9% annualized rate. -year increase seen in July.

The reading is likely to confirm to investors whether the Federal Reserve raises interest rates by 0.50% or 0.75% at its policy meeting later this month.

In recent weeks, Fed policymakers have doubled down on the central bank’s commitment to continue restrictive monetary policy as long as necessary to restore price stability.

Federal Reserve Governor Chris Waller said on Friday at a conference in Vienna, Austria that he supports a “significant” increase in the benchmark interest rate at the Fed’s meeting on 20-21. September.

Morning traffic along Constitution Avenue passes the U.S. Federal Reserve in Washington, DC on August 18, 2022. - U.S. central banks remain committed to raising interest rates further to curb rising prices, but agreed that slowing the pace of increases would be appropriate

Morning traffic along Constitution Avenue passes the U.S. Federal Reserve in Washington, DC on August 18, 2022. – U.S. central banks remain committed to raising interest rates further to curb rising prices, but agreed that slowing the pace of increases would be appropriate “at some point,” the Federal Reserve said on August 17. (Photo by MANDEL NGAN/AFP) (Photo by MANDEL NGAN/AFP via Getty Images)

“I expect it will take some time for inflation to move back to our 2 percent target and for the FOMC to tighten policy into 2023,” Waller said. “The policy rate will need to move meaningfully above this neutral level to further constrain aggregate demand and put more downward pressure on prices.”

CME Group’s Fedwatch tool places the probability of a three-quarters of a percent bump at 90%, up from 69% two weeks ago.

A list of Wall Street institutions also raised their stakes by 75 basis points this month, including Bank of America, Goldman Sachs and Nomura.

Elsewhere in the markets, Twitter ( TWTR ) was in focus after the social media platform responded to a letter from Elon Musk on Sept. 9 that indicated the company intends to enforce Musk’s takeover offer and demanded that he and his team comply the terms of the agreement. The stock was down nearly 2% Monday afternoon.

Disney ( DIS ) was also closely watched Monday after activist investor Dan Loeb appeared to back down on his recent push for the company to sell or spin off ESPN. Loeb’s hedge fund Third Point Management said in August it bought a $1 billion stake in Disney. The stock rose about 1% on Monday.

“We have a better understanding of ESPN’s potential as a standalone business and another vertical for Disney to reach a global audience to generate advertising and subscriber revenue,” Loeb said in a tweet Sunday after Disney CEO Bob Chapek promised to “restore ESPN to its growth trajectory.”

Occidental Petroleum Corporation ( OXY ) shares rose 2.5% on Monday afternoon after a filing with the Securities and Exchange Commission on Friday evening showed that Warren Buffett’s Berkshire Hathaway increased its stake in the oil conglomerate to 26.8%. Berkshire recently won regulatory approval to buy a stake of up to 50% in OXY.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

Click here to view the latest trending stock tickers on the Yahoo Finance platform

Click here for the latest stock market news and in-depth analysis, including events that move stocks

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedInand Youtube

Leave a Comment