Wall St closes up, regains ground as US inflation report nears
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[August 08, 2023] By
David French
(Reuters) - U.S. stocks finished higher on Monday, regaining some of the
ground lost last week, as investors added positions ahead of Thursday's
highly awaited U.S. inflation report.
The main stock indexes ended last week lower as investors took profits
after months of gains due to worries over economic data, mixed earnings
and rising Treasury yields.
U.S. stocks have sharply rallied in 2023, with the benchmark S&P 500
rising 17.7% this year, fueled by optimism around artificial
intelligence and hopes of a soft landing for the world's largest
economy.
"I think you've got enough people that might be looking to put some
money to work, because they've really missed a lot of this rally, so
that will limit any downside (from bouts of profit-taking)," said Jack
Janasiewicz, lead portfolio strategist at Natixis Investment Managers.
He noted to expect some sideways trading in the near term, as
profit-taking by investors who rode the rally balances out with those
entering on any weakness.
While August trading is seasonally slower with summer vacations, set
events and data releases can still offer investors new food for thought.
On Thursday, the latest U.S. consumer price report is expected to offer
clues about the Federal Reserve's monetary policy path, after Friday's
employment report re-ignited fears that the central bank could keep
rates higher for longer.
New York Fed President John Williams, a voting member this year, said he
expects interest rates could begin to slide in early 2024, as per a
report, while Governor Michelle Bowman said additional interest rate
hikes will likely be needed to lower inflation to the 2% target.
The Dow Jones Industrial Average rose 407.51 points, or 1.16%, to
35,473.13 - its largest one-day gain since June 15.
Meanwhile, the S&P 500 gained 40.41 points, or 0.90%, at 4,518.44, and
the Nasdaq Composite added 85.16 points, or 0.61%, at 13,994.40.
The tech-heavy Nasdaq snapped a four-session losing streak, matching its
longest negative run this year. It overcame weakness in Tesla, which
dropped 0.9% after the electric vehicle giant named Vaibhav Taneja to
replace Zachary Kirkhorn as its finance chief.
The Nasdaq also finished lower for four straight days at the start of
May. Before that, the longest losing streak was a six-session drop in
October.
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A trader works on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., July 26, 2023.
REUTERS/Brendan McDermid/File Photo
The S&P 500 also snapped a four-session losing run. It has had two
other such stretches in 2023: at the start of May and in February.
It had a five-session skid in December.
Most of the S&P's major indexes rose, led by gains of 1.9% in
communication services and 1.4% in financials.
Overall, second-quarter earnings have been better than expected so
far, with 79.1% of the 422 S&P 500 companies that have reported as
of Friday beating analysts' estimates, Refinitiv data shows.
Berkshire Hathaway rose 3.4% to a record high, after the
conglomerate run by billionaire investor Warren Buffett reported at
the weekend that quarterly operating profit topped $10 billion for
the first time.
However, Tyson Foods slid 3.8% after the meat packer disappointed
Wall Street expectations for third-quarter revenue.
Vaccine makers BioNTech SE and Moderna Inc slumped 7.5% and 6.5%,
respectively. The former said it was cutting its drug development
budget after quarterly revenue was hurt by a plunge in
pandemic-related demand. The latter was hit by investment bank
Leerink cutting its price target for the company.
Sage Therapeutics suffered its biggest one-day decline since
December 2019, dropping 53.6%, after the U.S. drug regulator
declined to approve a first-of-its-kind postpartum depression (PPD)
pill. Its partner on the drug, Biogen, recovered to trade 0.9%
higher.
Volume on U.S. exchanges was 9.92 billion shares, compared with the
10.86 billion average for the full session over the last 20 trading
days.
The S&P 500 posted 19 new 52-week highs and eight new lows; the
Nasdaq Composite recorded 71 new highs and 169 new lows.
(Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru
and David French in New York; Editing by Saumyadeb Chakrabarty, Maju
Samuel and Richard Chang)
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