Stock futures rose and Treasury yields fell after data showing a slowdown in inflation bolstered speculation the Federal Reserve is nearing the end of its interest-rate hikes.
(Bloomberg) — Stock futures rose and Treasury yields fell after data showing a slowdown in inflation bolstered speculation the Federal Reserve is nearing the end of its interest-rate hikes.
S&P 500 contracts extended gains, while futures on the tech-heavy Nasdaq 100 outperformed with a gain of about 1%. Treasury two-year yields, which are more sensitive to imminent policy moves, tumbled 13 basis points to below 4.75%. The dollar fell for a fourth straight session. Brent crude climbed above $80 a barrel for the first time since May.
The consumer price index rose 3% last month from a year ago, according to data from the Bureau of Labor Statistics. The so-called core measure — which economists view as the better indicator of underlying inflation — advanced 4.8%, the lowest since late 2021 but still well above the Fed’s target.
Traders will also wade through remarks from a raft of Fed speakers on Wednesday, while the central bank will issue its Beige Book survey of regional business contacts at 2 p.m. in Washington.
The Bank of Canada is likely to lift rates for a second consecutive meeting, bringing borrowing costs to a level not seen in 22 years. Most major commercial lenders predict the hike will be the last in this cycle.
Major banks will kick off the earnings season later this week, with JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. reporting results on Friday. The results from US banks are unlikely to provide clarity on areas of uncertainty, although there could be the first signs of a trough in net interest margin, Citigroup wrote in note downgrading JPMorgan to neutral.
For investors anxious the upcoming reporting season will put a dent on the recent stock rally, early tea leaves from S&P 500 firms offer some reassurance. Among the companies that issued forward guidance in June, the ratio of those whose forecast beat sell-side estimates exceeded misses by a multiple of two, according to data compiled by Bank of America Corp. That’s the highest reading since August 2021.
While profits from S&P 500 companies are projected to drop for a third straight quarter, earnings are expected to improve in the remainder of the year, with consensus calling for a small contraction in the third quarter and a return to profit growth in the fourth, Bloomberg Intelligence data show.
Key events this week:
- China trade, Thursday
- Eurozone industrial production, Thursday
- US initial jobless claims, PPI, Thursday
- US University of Michigan consumer sentiment, Friday
- US banks kick off earnings, Friday
Some of the main move in markets:
Stocks
- S&P 500 futures rose 0.8% as of 8:40 a.m. New York time
- Nasdaq 100 futures rose 1%
- Futures on the Dow Jones Industrial Average rose 0.6%
- The Stoxx Europe 600 rose 1.2%
- The MSCI World index rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index fell 0.6%
- The euro rose 0.5% to $1.1067
- The British pound rose 0.3% to $1.2966
- The Japanese yen rose 1% to 138.91 per dollar
Cryptocurrencies
- Bitcoin rose 0.8% to $30,814.7
- Ether rose 0.9% to $1,891.08
Bonds
- The yield on 10-year Treasuries declined eight basis points to 3.89%
- Germany’s 10-year yield declined four basis points to 2.61%
- Britain’s 10-year yield declined nine basis points to 4.57%
Commodities
- West Texas Intermediate crude rose 0.9% to $75.52 a barrel
- Gold futures rose 0.9% to $1,955 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller, Tassia Sipahutar and Robert Brand.
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