US stock indexes rose on Monday, nearing record highs after a recent string of gains, while investors looked to inflation data this week to gauge the likelihood of interest rate cuts in 2024.
The indices once again approached the historic highs reached in March, driven by stronger-than-expected corporate balance sheets and signs of a cooling of the labor market, which fueled bets on one or two interest rate cuts by the Federal Reserve this year.
“Not only are earnings better than expected, but the outlook is elevated,” said Thomas Hayes, president of Great Hill Capital LLC.
“The market appreciates this, but it also needs to feel reassured that inflation is not rising again and that it is potentially easing to give the Fed a cushion for at least one or perhaps two cuts before the end of the year.”
Core consumer prices are expected to have risen 0.3% in April from a month earlier, for an annual increase of 3.6%, economists forecast in a Reuters poll to be released on Wednesday.
Investors will also focus on a variety of other economic data this week, including monthly producer prices, retail sales and weekly unemployment claims.
According to LSEG’s rate odds app, traders are pricing in rate cuts of 44 basis points by the end of 2024, with the odds of a cut of at least 25 basis points in September at 66%.
The Dow Jones rose by 0.24% to 39,606.66 points. The S&P 500 rose 0.14% to 5,229.98 points, while the Nasdaq Composite rose 0.27% to 16,384.37 points.
Source: Terra
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