U.S. stocks rose on Tuesday, helped by optimism ahead of key inflation reports and as JPMorgan and other financial shares gained before earnings later this week.
Investors are looking for further clues on whether price pressures are abating and if the Federal Reserve is nearing the end of its interest rate hiking cycle.
U.S. consumer price data is due on Wednesday, while a producer prices report is due on Thursday. Several Fed officials said this week the central bank would likely need to raise rates further to curb inflation but that the end of its tightening cycle was getting close.
JPMorgan Chase & Co shares advanced 1.6% after Jefferies upgraded the stock to a “buy” ahead of the bank’s quarterly results due on Friday.
Reports from JPMorgan and other big banks later this week are expected to unofficially kick off the start of the second-quarter reporting period. The S&P banking index rose 1.5%.
Energy shares also jumped along with sharply higher oil prices.
“It’s nice to see the market broadening out here ahead of earnings,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“We’ve got a lot of data that’s going to be coming in here ... and expectations for the third quarter are also a concern in terms of any guidance companies might be giving on earnings calls.”
The S&P 500 is up 15.6% for the year so far, with technology up 40% in that period.
The Dow Jones Industrial Average rose 317.02 points, or 0.93%, to 34,261.42, the S&P 500 gained 29.73 points, or 0.67%, to 4,439.26 and the Nasdaq Composite added 75.22 points, or 0.55%, to 13,760.70.
Wall Street banks are expected to report higher profits for the second quarter as rising interest payments offset a reduction in dealmaking.
Among the S&P 500’s biggest gainers on the day, shares of videogame maker Activision Blizzard jumped 10% after a U.S. judge ruled that Microsoft may proceed with its planned acquisition of the “Call of Duty” game maker.
Salesforce shares rose 3.9% after the cloud services firm said it would increase prices of some of its cloud and marketing tools, a first in seven years.
Also, Amazon.com shares edged up 1.3% with its “Prime Day” 48-hour discount shopping event going on this week.
Volume on U.S. exchanges was 9.97 billion shares, compared with the 11.1 billion average for the full session over the last 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a 3.65-to-1 ratio; on Nasdaq, a 1.82-to-1 ratio favored advancers.
The S&P 500 posted 51 new 52-week highs and 1 new low; the Nasdaq Composite recorded 91 new highs and 40 new lows.
Markets still think the Federal Reserve is likely to hike rates this month, but a weak CPI might lessen the risk of a further move in September.
Currently futures imply around a 90% probability of a rise to 5.25%-5.5% this month, up 25 basis points.
The Fed will likely need to raise rates further to bring down inflation, but the end to its current monetary policy tightening cycle is getting close, several U.S. central bank officials said on Monday.
“I think we’re close,” said Michael Barr, Fed Vice Chair for Supervision.
Markets have also priced in higher rates in Europe and the UK. Canada’s central bank meets this week and markets imply a 69% chance of another hike.
The risk of higher global rates for longer has caused havoc in bond markets, where U.S. 10-year yields jumped 23 basis points last week, German yields rose 24 basis points and UK yields leapt 26 basis points. The yield on 10-year U.S. notes fell 4 basis points on Monday to 4.008%.
U.S. two-year yields last stood at 4.870%, having hit a 16-year high of 5.12% last week.
The dollar sank to around a three-week low against the yen on Monday as investors continued to price in expectations that the Federal Reserve is near the end of its tightening cycle.
The dollar index dipped 0.3%, while the euro was up 0.3%, and the pound rose 0.16%.
In commodity markets, gold was little changed after making a slight gain last week. [GOL/]