Monday Market Report: US stocks rise as investors await CPI, Wall Street fears Fed rate hikes too aggressive

August 8, 2022 Associated Press
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Stocks rose broadly in morning trading on Wall Street Monday as investors prepare for a busy week of updates on inflation.

The benchmark index is up 0.6 percent just after the opening bell, and the Nasdaq and Dow Jones industrials are also rising.

Small-company stocks outpaced the broader market’s gains in a sign that investors were confident about the economy. The Russell 2000 rose 1.7 percent.

Retailers and technology stocks were among some of the biggest winners. Amazon rose 1.2 percent and Apple rose 1 percent.

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Clean energy companies gained ground following the Senate’s approval for Democrats’ big election-year economic package, which includes funding to help fight climate change. First Solar rose 8.8 percent.

Bond yields fell. The yield on the 10-year Treasury slipped to 2.78 percent from 2.83 percent late Friday.

Wall Street’s benchmark S&P 500 lost 0.2 percent on Friday after government data showed American employers added twice the number of jobs expected to be created in July. That has complicated the job of the Federal Reserve, which may be forced to continue with aggressive interest rate hikes intended to cool the economy and soaring inflation.

“Now it seems they will be debating whether they need to be even more aggressive,” Edward Moya of Oanda said in a report.

Investors remain focused on inflation and its impact on businesses and consumers, along with the Federal Reserve’s efforts to fight higher prices. The central bank has been aggressively raising interest rates to pump the brakes on economic growth and rein in record-high inflation. The Fed is expected to hike short-term interest rates by another 0.75 percentage points at its next meeting.

Wall Street is worried that the Fed could hit the brakes too hard on the economy and bring on a recession. Updates this week on inflation could provide more clarity on whether the Fed will remain aggressive.

The Labor Department will release its July report for consumer prices on Wednesday, followed by the July report for prices at the wholesale level on Thursday.

This week’s inflation updates follow reports last week showing the employment market remains strong. While that’s good for the economy, it has complicated the job of the Fed, which may be forced to continue with aggressive interest rate hikes intended to cool the economy and soaring inflation.

Investors are still reviewing the latest round of corporate earnings, which could also provide more details on how hard inflation is hitting consumers and businesses. Nvidia fell 5.5 percent after it warned investors that its second-quarter revenue will fall short of forecasts because of weaker gaming revenue.

Generic drugmaker Viatris rose 8 percent after beating Wall Street’s second-quarter earnings and revenue forecasts.

Palantir slid more than 13 percent in premarket after the software company reported an unexpected second-quarter loss and forecast lower sales for the current quarter and year than Wall Street analysts had targeted.

Shares of Global Blood Therapeutics jumped about 4 percent before the bell after Pfizer said it will buy the company for about $5.4 billion. Global Blood Therapeutics climbed 33 percent on Friday after media reports suggested a deal was in the works.

In midday trading in Europe, the FTSE 100 in London was up 0.6 percent, the DAX in Frankfurt added 0.8 percent and the CAC 40 in Paris advanced 1.1 percent.

In Asia, the Shanghai Composite Index rose 0.3 percent to 3,236.93 after China’s July exports rose 18 percent over a year earlier, beating forecasts.

China’s trade surplus swelled to $101 billion in July after imports rose just 2.3 percent over a year ago, reflecting weak domestic demand.

The Hang Seng in Hong Kong fell 0.8 percent to 20,050.15 while the Nikkei 225 in Tokyo gained 0.2 percent to 26.241.13.

The Kospi in Seoul gained less than 0.1 percent to 2,493.10 and Sydney’s S&P-ASX 200 shed less than 0.1 percent to 7,020.60.

India’s Sensex gained 0.9 percent at 58,892.25. Taiwan, New Zealand, Singapore and Bangkok retreated while Jakarta gained.

In energy markets, benchmark U.S. crude fell 86 cents to $88.15 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 47 cents to $89.01 on Friday. Brent crude, the price basis for international trading, shed $1.02 to $93.90 per barrel in London. It gained 80 cents to $94.92 the previous session.

Senate approval for Democrats’ big election-year economic package is lifting clean energy companies: SunPower is up 3.4 percent.

The dollar fell to 134.85 yen from Friday’s 135.11 yen. The euro advanced to $1.0200 from $1.0178.

Wall Street is coming off its best month for stocks since late 2020, a rally driven by falling bond yields. Traders hoped the economy was slowing enough for the Fed to ease off.

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