U.S. stocks are on the rise amid optimism that the Federal Reserve will maintain its current interest rate levels during its upcoming meeting, signaling a potential pause in interest rate hikes.
As of 10:38 ET (14:38 GMT), the Dow Jones Industrial Average had gained 55 points or 0.2%, the S&P 500 was up 0.4%, and the NASDAQ Composite had risen by 0.5%.
Last week, the three major Wall Street indices experienced losses, with the Dow Jones Industrial Average declining approximately 0.8%. The tech-heavy Nasdaq Composite and the broader-based S&P 500 also posted their first negative week in three, dropping 1.9% and 1.3%, respectively.
Concerns over Inflation Data
The recent equity market losses were primarily driven by concerns that stronger-than-expected economic data might lead the Federal Reserve to keep interest rates elevated for a longer duration than previously anticipated. In this context, investors are closely monitoring the latest Consumer Price Index (CPI) and Producer Price Index (PPI) readings scheduled for Wednesday and Thursday, respectively. Of particular interest are the potential inflationary pressures resulting from higher energy costs.
While market expectations indicate that the Federal Reserve is likely to maintain its current interest rates this month, policymakers are still hesitant to declare victory over inflation. Dallas Fed President Lorie Logan stated that another rate pause could be appropriate when the central bank meets later this month.
Tech Sector Focus
The technology sector faced headwinds last week, primarily due to rising U.S. bond yields that disproportionately impacted several of the sector’s highly valued stocks. In the week ahead, financial updates are expected from Oracle on Monday and Adobe on Thursday. Additionally, Apple is set to host a product event on Tuesday, with expectations centered on the unveiling of the iPhone 15.
Alibaba shares slipped 1.7% following the resignation of the company’s former group CEO, Daniel Zhang, just two months after shifting his focus to cloud computing, raising questions about the unit’s spin-off plan.
Tesla Inc. saw its shares rise by 6.4% after receiving an upgrade from Morgan Stanley. The electric vehicle manufacturer is expected to benefit from its autonomous technology.
Crude Market Awaits IEA and OPEC Reports
Oil prices experienced a slight decline from their 10-month highs after a robust rally, driven by Saudi Arabia and Russia’s decision to extend voluntary supply cuts until year-end. This week, the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) are set to release their monthly reports. Investors will closely examine these reports for insights into likely demand growth, particularly in light of data indicating a cooling Chinese economy despite the earlier lifting of anti-COVID restrictions.
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