The rally on Treasury yields has improved investors’ mood considerably this week as excitement about U.S. disinflation builds despite conflicting signals from around the world. After bumpy start to the third quarter, stocks and bonds rallied together – with both two- and 10-year Treasury yields recoiling sharply back below 5% and 4% thresholds respectively. The Associated Press has the story:
Wall Street edges higher ahead of inflation data
Newslooks- NEW YORK (AP)
Stocks are edging higher in early trading as Wall Street waits for updates later in the week on inflation and corporate profits. The S&P 500 was up 0.2% early Tuesday and looks to be on track for another quiet day after a listless Monday. The Dow was up 164 points, or 0.5%, and the Nasdaq composite was up less than 0.1%. The week’s main event arrives Wednesday when the government offers the latest update on inflation in consumer prices. The hope on Wall Street is that a continued easing in inflation will convince the Federal Reserve to stop raising interest rates.
Wall Street ticked modestly higher early Tuesday ahead of new U.S. inflation data that will play a role in a decision by the Federal Reserve on interest rates when it meets later this month.
Futures for the Dow Jones industrials rose 0.1% and the S&P 500 edged 0.2% higher before the opening bell.
For the first time in more than a year, the Fed did not raise its benchmark lending rate when it met in early June. Fed officials have suggested that as many as two more increases are possible this year.
Forecasters expect inflation in June to fall to 3.1% from the previous month’s 4%. That would be higher than the Fed’s 2% target but down sharply from last year’s peak above 9%.
“They will have a hard time justifying further rate increases if headline inflation — which is their mandate — is moving convincingly towards target,” said Rubeela Farooqi of High Frequency Economics in a report.
It is still hoped that the U.S. can avoid a recession after a run-up in the Fed’s benchmark lending rate to cool inflation. They expected at least a brief recession starting this quarter but are more optimistic after U.S. hiring stayed strong.
Investors are waiting for U.S. corporate profit reports for an update on how companies are being affected by inflation and weaker consumer spending.
Delta Air Lines and PepsiCo report Thursday. JPMorgan Chase will headline a rush of bank reports on Friday.
The wide expectation is for companies across the S&P 500 to report a 7.2% drop in earnings per share for the second quarter from a year earlier. That would be the biggest drop for the index since the spring of 2020, when the coronavirus pandemic was paralyzing the global economy.
At midday in Europe, the CAC 40 in Paris rose 1%, the DAX in Frankfurt added 0.4% and the FTSE 100 in London declined 0.1%.
Tuesday in Asia, the Shanghai Composite Index gained 0.6% to 3,221.36 and the Nikkei 225 in Tokyo added less than 0.1% to 32,203.57. The Hang Seng in Hong Kong advanced 1% to 18,659.93.
The Kospi in Seoul surged 1.7% to 2,562.49 and Sydney’s S&P-ASX 200 jumped 1.5% to 7,108.90.
India’s Sensex was 0.6% higher at 65,719.45. New Zealand declined while Southeast Asian markets advanced.
In energy markets, benchmark U.S. crude rose 38 cents to $73.37 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 87 cents to $72.99 on Monday. Brent crude, the price basis for international oil trading, advanced 34 cents to $78.03 per barrel in London. It lost 78 cents the previous session to $77.69.
The dollar fell to 140.30 yen from Monday’s 141.32 yen. The euro held at $1.0999.
Wall Street’s benchmark S&P 500 index gained 0.2% on Monday following its second weekly decline in two months. The Dow Jones Industrial Average climbed 0.6% and the Nasdaq composite added 0.2%.
