NEW YORK: US stocks finished higher on Monday (Aug 7), regaining some of the ground lost last week, as investors added positions ahead of Thursday’s highly awaited US inflation report.
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 main stock indices ended last week lower as investors took profits after months of gains due to worries over economic data, mixed earnings and rising Treasury yields.
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.
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.
The earlier pullback was “healthy for the market,” said Peter Cardillo of Spartan Capital.
“Investors are now concentrating on the earnings,” he added.
He noted that the market might maintain its upward trend but experience some volatility ahead of an annual central banking symposium in Jackson Hole, Wyoming, in the later part of August.
US stocks have sharply rallied in 2023, with the benchmark S&P 500 rising 17.7% this year, fuelled 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 US consumer price report is expected to offer clues about the Federal Reserve’s monetary policy path, after Friday’s employment report reignited 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 gGovernor Michelle Bowman said additional interest rate increases will likely be needed to lower inflation to the 2% target.
Among individual companies, 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 US$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. – Reuters, AFP