Wall Street edges higher as investors keep an eye on inflation data

Reading Time: 2 minutes

U.S. Stock Indexes Edge Higher, Nearing Record Highs as Investors Await Inflation Data

U.S. stock indexes edged higher on Monday, nearing record highs after a recent run of gains, as investors awaited key inflation figures this week to gauge the likelihood of interest rate cuts in 2024.

The indexes were back near all-time highs hit in March, boosted by stronger-than-expected earnings reports, and signs of a cooling labor market that have fueled bets of one or two rate cuts by the U.S. Federal Reserve this year.

Monday’s gains follow a multi-week winning streak for the main benchmarks.

The keenly awaited inflation data on Wednesday is expected to show that core consumer prices rose 0.3% on a month-over-month basis in April, for an annual rise of 3.6%, according to economist forecasts in a Reuters poll.

“I don’t think anyone expects the Fed to say we’re going to raise rates, even if the number came in higher than expected, so that’s off the table,” said Joe Saluzzi, co-head of equity trading at Themis Trading in Chatham, New Jersey.

“It’s just a matter of how long will they hold and will there be a cut at some point during the year.”

Fed Vice Chair Phillip Jefferson said on Monday he supports keeping interest rates steady until it’s clear that price pressures are moderating.

Traders are currently pricing in rate cuts of 43 basis points (bps) from the Fed by the end of 2024, according to LSEG’s rate probabilities app, with odds for a September cut of at least 25 bps at 65%.

To better gauge the Fed’s rate path, investors will focus on a spate of other economic readings this week, including monthly producer prices, retail sales and weekly jobless claims, as well as corporate earnings.

Major companies, including Home Depot, Walmart, and Cisco are reporting this week.

Of the 459 S&P 500 companies that reported through Friday, 77.3% beat analysts’ profit estimates, according to LSEG data. The long-term average is 66.7%.

At 11:24 a.m. the Dow Jones Industrial Average rose 47.17 points, or 0.12%, to 39,560.01, the S&P 500 gained 2.90 points, or 0.06%, to 5,225.58 and the Nasdaq Composite gained 42.66 points, or 0.26%, to 16,383.53.

Shares of videogame retailer GameStop jumped 65% after “Roaring Kitty”, a former marketer at an insurance firm credited with sparking the 2021 meme stock rally, returned to X.com after a three-year hiatus.

Other highly shorted names including AMC jumped 32% and Koss Corp soared 25%.

Alphabet slipped 1.5% as Microsoft-backed OpenAI looked set to announce its artificial intelligence (AI)-powered search product on Monday.

Apple added 1.6% after a report said the company had closed in on an agreement with ChatGPT-maker OpenAI to use the startup’s technology on the iPhone.

Advancing issues outnumbered decliners by a 2.26-to-1 ratio on the NYSE, and 1.99-to-1 ratio on the Nasdaq.

The S&P 500 posted 32 new 52-week highs and no new lows, while the Nasdaq recorded 125 new highs and 61 new lows.