Stocks extend gains as investors await CPI data

US stocks rose on Monday as Wall Street edged closer to highly anticipated inflation data this week.

The S&P 500 climbed 0.7%, while the Dow Jones Industrial Average added 140 points, or 0.4%. The tech-heavy Nasdaq Composite rose 0.7%.

The moves come after all three major averages posted weekly gains for the first time in three weeks. The S&P 500 and Nasdaq each rose more than 4% in the shortened holiday week, while the Dow Jones rose 3.2%.

In commodities, oil prices rose slightly, extending a series of recent swings. West Texas Intermediate (WTI) and Brent crude oil futures each rose nearly 2% to $88.44 a barrel and $94.58 a barrel, respectively.

All eyes are on the consumer price index (CPI) for August is due out before markets open on Tuesday.

Economists polled by Bloomberg had expected the headline CPI to have risen 8.1% year on year in August, a moderation from an 8.5% increase seen in July. On a month-to-month basis, the CPI is expected to show a price decline of 0.1% from July to August, mainly due to the continued decline in energy prices. If it materializes, it would mark the first monthly decline since May 2020.

Core CPI, which excludes the volatile food and energy components from the report and is closely monitored by the Fed, is expected to have risen slightly in August, rising 6.1% from the same month last year, more than 5.9% year-on-year. year-on-year increase seen in July.

The reading will likely confirm for investors whether the Federal Reserve raises interest rates by 0.50% or 0.75% at its policy meeting later this month.

In recent weeks, Fed policymakers have stepped up their efforts on the US central bank’s commitment to continue tight monetary policy for as long as necessary to restore price stability.

Federal Reserve Governor Chris Waller said at a conference in Vienna, Austria on Friday that he supports a “significant” increase in the benchmark interest rate at the Fed’s September 20-21 meeting.

Morning traffic along Constitution Avenue passes the U.S. Federal Reserve in Washington, DC on August 18, 2022. - U.S. central bankers remain determined to raise interest rates further to stifle rising prices, but agreed that it would be appropriate to slow down the rate of increases

Morning traffic along Constitution Avenue passes the U.S. Federal Reserve in Washington, DC on August 18, 2022. – U.S. central bankers remain determined to raise interest rates further to stifle rising prices, but agreed that it would be appropriate to slow the pace of increases “at some point,” the Federal Reserve said Aug. 17. (Photo by MANDEL NGAN/AFP) (Photo by MANDEL NGAN/AFP via Getty Images)

“I think it will be some time before inflation returns to our 2% target and the FOMC tightens policy through 2023,” Waller said. “The policy rate will need to move significantly above this neutral level to further restrain aggregate demand and put downward pressure on prices.”

CME Group The Fedwatch tool places the probability for a three-quarters percent increase to 90%, from 69% two weeks ago.

A list of Wall Street institutions also increased their bets on a 75 basis point rise this month, including Bank of America, Goldman Sachs and Nomura.

Elsewhere in the markets, Twitter (TWTR) was at the center of concern after the social media platform responded to a September 9 letter from Elon Musk stating that the company intended to implement the merger agreement and demanded that Musk and his team abide by the terms of the agreement. Shares slid about 1% at the start of trading.

Disney (SAY) was also the center of attention early Monday after activist investor Dan Loeb apparently reversed a recent push for the company to sell or part ways with ESPN. Loeb’s hedge fund Third Point Management said in August it bought a $1 billion stake in Disney. Shares gained about 2% on Monday morning.

“We have a better understanding of ESPN’s potential as a standalone business and another vertical for Disney to reach global audiences to generate advertising and subscription revenue,” Loeb said in a tweet on Sunday after Disney CEO Bob Chapek pledged to “restore ESPN to its growth trajectory”.

Western Petroleum Corporation (OXY) shares rose slightly after a filing with the Securities and Exchange Commission on Friday night showed that Warren Buffet’s Berkshire Hathaway increased its stake in the oil conglomerate to 26.8%. Berkshire recently received regulatory approval to acquire up to a 50% stake in OXY.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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