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U.S. stocks closed higher on Monday, recovering some of the losses from last week. Investors were adding positions in anticipation of the highly anticipated U.S. inflation report on Thursday. The previous week saw a decline in the main stock indexes due to concerns over economic data, mixed earnings, and rising Treasury yields. Despite this, U.S. stocks have experienced a significant rally in 2023, with the S&P 500 rising 17.7 percent fueled by optimism surrounding artificial intelligence and hopes of a smooth economic transition.
According to Jack Janasiewicz, lead portfolio strategist at Natixis Investment Managers, many investors are looking to invest their money due to missing out on this rally. This sentiment will help limit any potential downside from profit-taking. Janasiewicz also expects some sideways trading in the short term as investors taking profits balance out with those entering on weakness. Although August trading tends to be slower due to summer vacations, specific events and data releases can still provide investors with new opportunities for analysis.
On Thursday, the U.S. consumer price report is expected to provide insights into the Federal Reserve’s monetary policy path. This comes after Friday’s employment report created concerns that the central bank may maintain higher interest rates for a longer period. New York Fed President John Williams and Governor Michelle Bowman have expressed their views on interest rates, with Williams stating that he expects rates to begin sliding in early 2024 and Bowman indicating the need for additional rate hikes to lower inflation to the 2 percent target.
In Monday’s trading, the Dow Jones Industrial Average recorded its largest one-day gain since June 15, rising 407.51 points or 1.16 percent to reach 35,473.13. The S&P 500 also saw gains, rising 40.41 points or 0.90 percent to reach 4,518.44. The Nasdaq Composite performed well, adding 85.16 points or 0.61 percent to reach 13,994.40. This helped the Nasdaq break a four-session losing streak. Notably, Tesla experienced a slight drop of 0.9 percent as it announced Vaibhav Taneja as its new finance chief.
The S&P 500’s major indexes mostly saw gains, particularly in communication services and financials with increases of 1.9 percent and 1.4 percent, respectively. Overall, second-quarter earnings have exceeded expectations, with 79.1 percent of the 422 S&P 500 companies reporting beating analysts’ estimates.
Berkshire Hathaway reached a record high, rising 3.4 percent, as the conglomerate reported quarterly operating profit exceeding $10 billion for the first time. However, Tyson Foods disappointed Wall Street with lower-than-expected third-quarter revenue, causing a 3.8 percent drop in its stock. Vaccine makers BioNTech SE and Moderna Inc also experienced declines of 7.5 percent and 6.5 percent respectively, with BioNTech attributing the drop to a decrease in pandemic-related demand and Moderna facing a price target cut from investment bank Leerink. Sage Therapeutics suffered a significant decline of 53.6 percent as the U.S. drug regulator declined to approve its postpartum depression pill, while its partner Biogen recovered slightly by trading 0.9 percent higher.
Trading volume on U.S. exchanges was slightly lower than the average for the past 20 trading days, with 9.92 billion shares compared to the average of 10.86 billion. The S&P 500 saw 19 new 52-week highs and eight new lows, while the Nasdaq Composite recorded 71 new highs and 169 new lows.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
