S&P 500, Nasdaq put together first 4-day advance in more than 2 months
The S&P 500 rose for a fourth day on Monday for the first time since July 7, while the Nasdaq Composite and Nasdaq-100 indexes did the same for the first time since July 8.
Animal spirits also returned to the iShares Russell 1K Growth ETF (IWF), also higher for a fourth day for the first time on July 8.
Not surprisingly, the dollar index fell for the fourth day in a row.
In terms of commodities, silver was the top performer, rising 5.82% to $19.86, the highest since July 28 but the first six-day gain since Russia invaded Ukraine (February 24). Corn and soybean contracts hit their highest since late June — bad news for farm input costs and, indirectly, food inflation.
— Scott Schnipper with Christopher Hayes and Gina Francolla
The inflation report is expected to show a reduction in prices, but not enough for the Fed
Inflation likely eased a bit in August as gas prices fell, but probably not enough to make a difference to Federal Reserve policymakers.
The Consumer Price Index will be released at 8:30 am ET on Tuesday. Prices, excluding food and fuel, are expected to have risen 0.3% from July and 6% from a year ago. Including these two sectors, the so-called general CPI is expected to decrease by 0.1% for the month, but will still increase by 8% annually.
For headline CPI, it will be the second month in a row with little change, after July showed flat prices. But for the core, it would be the second month in a row of a 0.3% increase.
While both numbers point to slower price gains, Fed officials have said in recent days that the one-month report will not sway them in their fight against inflation. The central bank is expected to approve its third consecutive 0.75 percentage point interest rate hike next week.
If the Fed follows market expectations, this will bring the benchmark central bank funds rate to a range of 3% to 3.25%. This would be the highest level of the rate since the beginning of 2008.
—Jeff Cox
Stocks close higher, extend winning streak
Shares ended for the fourth session in a row. The Nasdaq Composite rose nearly 1.3% to lead the way. The Dow underperformed but was still up more than 200 points.
– Jesse Pound
Bridgewater’s Greg Jensen sees stubbornly high inflation
Bridgewater co-CIO Greg Jensen said the belief that inflation will normalize to around 3% over time is too optimistic. The widely followed strategist believes price pressures will remain “stubbornly higher than the market expects,” he told the annual SALT conference in New York. Persistent inflation, combined with slowing growth in the US, will continue to weigh on asset prices, Jensen said.
When asked about where to put the money to work right now, Jensen said Latin American and commodity assets look relatively attractive.
— Yun Li
Alphabet and Microsoft aren’t pulling their weight to boost stocks, Strategas notes
Alphabet and Microsoft aren’t doing their part to help the market much since the latest move to the upside began last week, Strategas’ technical and macro research team led by Chris Verrone said on Monday in a note
“As strong as some corners of the market were last week, we also wouldn’t describe heavyweights like GOOGL or MSFT as compelling leaders,” they wrote. Both stocks have shown only weak rallies. By Monday afternoon, while the S&P 500 was up about 0.92%, Microsoft added 0.69% while Google parent Alphabet fell 0.24%.
Conversely, financials and consumer discretionary stocks have improved of late, but are still not dominant, Strategas said. Although crude oil has been soft of late, “ConocoPhillips is performing very well,” as are Albemarle and Ulta Beauty.
— Scott Snapper
Alphabet and Microsoft aren’t pulling their weight to boost stocks, Strategas notes
Alphabet and Microsoft aren’t doing their part to help the market much since the latest move to the upside began last week, Strategas’ technical and macro research team led by Chris Verrone said on Monday in a note
“As strong as some corners of the market were last week, we also wouldn’t describe heavyweights like GOOGL or MSFT as compelling leaders,” they wrote. Both stocks have shown only weak rallies. By Monday afternoon, while the S&P 500 was up about 0.92%, Microsoft added 0.69% while Google parent Alphabet fell 0.24%.
Conversely, financials and consumer discretionary stocks have improved of late, but are still not dominant, Strategas said. Although crude oil has been soft of late, “ConocoPhillips is performing very well,” as are Albemarle and Ulta Beauty.
— Scott Snapper
Jeff Mills says the returns are a reason to be skeptical of this rally
The continued recovery in the stock market looks reasonably healthy in the near term, but it’s probably too early to call the shots, according to Jeff Mills of the Bryn Mawr Trust.
“That 3,900 level in the S&P 500 is important technically, and the move we’ve seen from it has been pretty strong at this point. I don’t know if it’s strong enough to call it a very clear reversal, but in terms of the breadth and the strength of the rebound has been reasonably encouraging,” Mills said.
Investor positioning and economic data may also have helped the recent recovery, Mills said, but stubbornly high yields in the Treasury market are cause for skepticism. The 10-year Treasury yield is up about 4 basis points late Monday, trading near 3.364%.
“You also saw it at the June demonstration where the [stock] The market bought this possibility of a Fed pivot or a less difficult outcome for the economy, but the bond market never did. … And overall, that’s what you saw last week as well,” Mills said.
“As long as short-term interest rates continue to rise, the bearish trend that still exists in the equity market will likely remain intact, in my view,” he added.
– Jesse Pound
Cathie Wood says deflation is underway
What delivery wait times say about demand for Apple’s latest iPhone
Some iPhone 14 models are already showing signs of strong demand among consumers less than a week after Apple’s latest launch event and even as inflation nears record highs.
That’s according to wait times deciphered by analysts who indicate that certain models in particular are already experiencing shipping delays that exceed their predecessors. Such extended delivery times could be a sign of strengthening demand among consumers despite fears of a slowdown in spending, analysts say.
CNBC Pro readers can check out the full story here.
— Samantha Subin
Energy stocks lead as oil futures rise
Energy was the best performing sector in the S&P 500 on Monday, boosted by a rally in oil prices.
APA gained 5%, while Devon Energy rose more than 4%. Marathon Oil, Hess, Pioneer Natural Resources and Williams added more than 3%.
In the commodities market, futures for the benchmark US West Texas Intermediate and European benchmark Brent rose more than 1%.
—Jesse Pound
The main market movements at noon
Take a look at some of Monday’s biggest market moves:
Gilead Sciences: Shares of Gilead rose 3.8% after the company revealed it settled a patent case over its HIV therapies with generic drugmakers.
Carvana: Carvana rose 7.8% after being upgraded to overweight from neutral by Piper Sandler analyst Alexander Potter, who called the stock “grossly undervalued.”
Bristol-Myers Squibb: Shares of Bristol-Myers Squibb rose 5.4% after the U.S. Food and Drug Administration approved the company’s oral treatment for plaque psoriasis known as Sotyktu.
Read the full story here.
—Michelle Fox
Public services reached an all-time high
S&P 500 utilities companies added to their strong 2022 gains on Monday, with the Select Utilities Sector SPDR Fund ( XLU ) hitting an all-time high.
The fund traded up 0.4% and is now up 8.6% year to date. The ETF has also been on fire in the third quarter, gaining nearly 11% in that time.
Several utility stocks hit record highs or 52-week highs on Monday, including American Electric Power, Constellation Energy, CenterPoint Energy and Consolidated Edison. Sempra Energy and Xcel Energy also hit all-time highs.
Check out some other stocks that hit 52-week or all-time highs:
- Genuine parts trading at all-time highs until its IPO in 1948
- Last traded at all-time highs back to its IPO in October 2007
- Progressive trading at all-time highs until its 1971 IPO
- Cigna traded at all-time highs until its IPO in 1972
- Republic Services was trading at all-time highs until its IPO in 1998
- Clean Harbors traded at record highs until its IPO in November 1987
- Hubbell trades at all-time highs throughout our history going back to 1972
- Silgan Holdings was trading at all-time highs since it began trading in 1997
- PG&E quote at levels not seen since March 2020
- Trade health trade to all-time highs on its June 2019 IPO
- Boosted brands are trading at levels not seen since February 2021
- Graphic Packaging traded at all-time highs until its IPO in June 1992
– Christopher Hayes, Fred Imbert
Stocks have come back to life, says Shah
The summer market rally based on misguided expectations of an accommodative Federal Reserve has had significant success recently, according to Principal Global Investors chief global strategist Seema Shah.
“In mid-June, as oil prices began to fall, many investors began to believe that the next spike in inflation would allow the Fed to end its rate hike cycle,” Shah said. “Markets also reasoned that an economic slowdown could lead the Fed to stop monetary tightening soon.”
At the Jackson Hole Symposium and since then, however, the Fed has been firm in its position that it will do whatever it takes to combat high inflation and continue tightening until the job is done.
“The Fed’s position is pretty clear,” Shah said. “Because of the enormity of the inflation task ahead, a weakened economy cannot prevent further monetary tightening and rates will need to remain in a restrictive environment for an extended period.”
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