U.S. stock indexes rose on Monday, lifted in part by gains in Microsoft and Pfizer, as investors braced for key inflation data on Tuesday and a policy announcement from the Federal Reserve later in the week.
After strong gains in October and November, the benchmark S&P 500 (.SPX) stumbled out of the gate in December, and suffered its biggest weekly percentage decline in nearly three months as mixed economic data helped fuel recession concerns.
Consumer inflation data will be closely monitored on Tuesday, and is expected to show prices increased by 7.3% in November on an annual basis, slowing from the 7.7% rise in the previous month, while the “core” reading which excludes food and energy is expected to show a 6.1% increase from the 6.3% in the prior month.
“That is one of the reasons why the market is feeling a little positive, because if you just take the overall CPI, if it gets down to another drop from 7.7%, there is a real trend there,” said Rob Conzo, CEO and managing director of The Wealth Alliance in New York.
“It may be a tick down and if it is that will be just one more little notch in the ‘yes’ column of a trend, the report doesn’t mean things are great it just means one little step forward in a year-long trend.”
The Dow Jones Industrial Average (.DJI) rose 288.27 points, or 0.86%, to 33,764.73, the S&P 500 (.SPX) gained 23.26 points, or 0.59%, to 3,957.64 and the Nasdaq Composite (.IXIC) added 40.23 points, or 0.37%, to 11,044.84.
A cooler than expected inflation report would help support the belief the aggressive policy actions taken by the Fed this year to slow the economy are taking hold. The central bank is widely expected to hike by 50 basis points on Wednesday, which would mark a step down from the hikes of 75 basis points in the last four meetings.
Treasury Secretary Janet Yellen on Sunday forecast a substantial reduction in U.S. price pressure in 2023, while also acknowledging a risk of a recession.
Fears the Fed will make a policy mistake and tilt the economy into a recession have weighed heavily on Wall Street this year, with the S&P 500 down about 17% and on track for its first yearly drop since 2018 and largest percentage drop since 2008.
Biotech firm Horizon Therapeutics Plc (HZNP.O) surged 15.38% following a buyout offer from Amgen Inc (AMGN.O), while Coupa Software Inc (COUP.O) soared 26.71% after agreeing to sell itself to private equity firm Thoma Bravo LLC.
Weber Inc (WEBR.N) climbed 23.38% after the outdoor cooking firm agreed to be taken private by controlling shareholder BDT Capital Partners LLC.
Advancing issues outnumbered declining ones on the NYSE by a 1.20-to-1 ratio; on Nasdaq, a 1.22-to-1 ratio favored advancers.
The S&P 500 posted 2 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 51 new highs and 231 new lows.