4.08pm: Dow, S&P, Nasdaq march higher
US markets powered ahead in late trading to close sharply higher ahead of key inflation data tomorrow and the Federal Reserve’s rate decision on Wednesday.
At the close the Dow Jones Industrial Average was 528 points, or 1.58%, higher at 34,004.81, the S&P 500 jumped 56 points, or 1.43%, to 3,991 and the Nasdaq Composite advanced 139 points, or 1.26%, to 11,144.
Renewed M&A activity provided a boost to sentiment with Coupa Software and Horizon Therapeutics among the biggest movers after the companies announced they’ve agreed to be bought.
Horizon jumped 15% after the company announced it has agreed to be acquired by Amgen in a deal valued at approximately $26.4 billion, or $116.50 per share, in cash while Coupa Software soared 26% after the private-equity firm Thoma Bravo agreed to buy the company in an all-cash deal worth $8 billion, or $81 per share.
Another stock on the move was Boeing Co (NYSE:BA)., which rose 1.8%, following reports that Air India is close to placing landmark orders for as many as 500 jetliners worth tens of billions of dollars from both Airbus and Boeing.
12:04pm: Markets make up ground after tough week
At midday, the Dow was up 268 points, 0.8%, to 33,744, the Nasdaq Composite added 33 points, 0.3%, to 11,038 and the S&P 500 improved 20 points, 0.5%, to 3,954. The benchmarks are recovering from a Friday sell-off that rounded out the worst week since September.
While things in the US are turning up, at least for the moment, ripples from last week are being felt internationally.
“European markets have suffered the same fate as their Asian counterparts today, with Friday’s US sell-off finally catching up with markets elsewhere around the world," said Joshua Mahony, senior market analyst at online trading platform IG. "Improved sentiment around Chinese efforts to reopen appear to swiftly faltering, with concerns over a dramatic surge in Covid cases bringing the potential for further restrictions and protests. The recent volatility in crude oil highlights the ongoing questions over whether the Chinese economy is truly ready to return or on the cusp of yet another series of restrictions. ”
Stateside, all eyes remain on the Federal Reserve, which is scheduled to hold its December meeting this week and expected to raise interest rates by 50 basis points.
9.35am: Stocks inch higher at the open
US stocks opened in the green on Monday ahead of a big week for the markets, including key inflation data and the outcome of the Fed’s final rate-setting meeting for 2022.
Just after the market opened, the Dow Jones Industrial Average had added 125 points or 0.4% at 33,601 points, the S&P 500 was up 8 points or 0.2% at 3,942 points, and the Nasdaq Composite had gained 21 points or 0.2% at 11,025 points.
Forex.com market analyst Fiona Cincotta said stronger-than-expected data released last week has raised concerns over the Fed’s ability to slow down the pace of their aggressive rate hikes, as guided by Fed chair Jerome Powell in a speech at the end of November.
“The market is currently pricing in a 75% probability of a 50 basis point rate hike and a 25% chance of a 75 basis point rate hike,” she said.
“[Tuesday’s] inflation data is unlikely to deter the Fed from a 50 basis point hike this month. However, cooling inflation could raise the chances of a 25 basis point rate hike in January.”
6.30am: Pivotal week of economic releases
Wall Street is expected to start the new week marginally higher as traders hold back on placing any big bets ahead of a key US inflation report due tomorrow ahead of the Federal Reserve’s last move on interest rates for 2022.
Futures for the Dow Jones Industrial Average rose 0.2% in Monday pre-market trading, while those for the broader S&P 500 index gained 0.3% and for the Nasdaq-100 added 0.4%.
Stocks closed lower on Friday after high-than-expected US producer prices inflation data raised concerns that the Fed will stick to its path after hiking rates by 75 basis points at each of its last four meetings.
November’s producer price index (PPI) showed wholesale prices increased 0.3% last month, coming in higher than the consensus analyst expectation of 0.2%.
The Dow lost 305 points to 33,476 on Friday, while the S&P 500 eased 29 points at 3,934 and the tech-heavy Nasdaq fell 77 points to 11,005.
The headline rate of consumer price (CPI) inflation for November is expected to show a slight month-on-month deceleration to 0.3% from 0.4% in October.
“The fragility of recent rebounds was highlighted as fresh risk-off sentiment emerged ahead of an inflation print this week, followed by the latest Federal Reserve decision on interest rates,” commented Richard Hunter, head of markets at interactive investor.
“The two announcements are intertwined, with any prolonged heat on the inflation number providing the Fed with more ammunition to maintain its hawkish view," he added.
While the market is pricing in a 50 basis point rise in US interest rates this time out, Hunter said the accompanying comments on the Fed’s outlook will be of equal interest as it could encompass not only the likely terminal rate but also indicate how long rates may need to remain elevated.
"In the meantime, overtightening, which could lead to a recession, remains the key market concern,” Hunter continued. “The inflation number due this week will drive sentiment, and data released on Friday which showed producer prices rising added to concerns that the inflationary beast may not yet have been tamed.”