U.S. stocks are higher on Monday, recovering from last week’s decline, with investors looking ahead to the release of the latest inflation reading as well as the start of earnings season for the first quarter.
Wall Street started this week with positive numbers following last Friday’s gains, which exceeded expectations for non-farm payrolls. This recovery comes after significant losses the previous week, during which investors reduced their expectations for a Federal Reserve rate cut in June.
March CPI takes the spotlight
Attention will now turn to the March consumer price index data, set for release next Wednesday. This data is expected to show a slight cooling in core inflation, which excludes volatile items like fuel and food, with an estimated annual rate of 3.7%—down from last month’s 3.8% but still above the Fed’s 2% target.
The reading will also follow consistent warnings from Fed officials that sticky inflation may delay rate cuts until early 2024.
Hard-line comments from Fed officials, as well as Friday’s payrolls figure, have caused investors to lower expectations for a June rate cut.
Q1 earnings and bank results kick-off
Also, this week marks the start of first-quarter earnings season, which will help determine whether the market’s largest U.S. stocks can justify the recent increase in their valuations. So far this year, all Wall Street indexes are trading 10% higher and near all-time highs.
The largest U.S. lenders, JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC), will report their results on Friday.
Delta Air Lines (DAL) and the largest asset manager BlackRock (BLK) will also release their quarterly updates later in the week.
Elsewhere, Boeing (BA) stocks are down 0.5% after the engine cowling of a Southwest Airlines (LUV) aircraft – a Boeing 737-800 – detached on takeoff in Denver and hit the wing flap, compounding the aircraft builder’s latest operational problems.
Oil prices fall after easing tensions in the Middle East
Oil prices fell Monday on increased confidence in a possible ceasefire in the Israel-Hamas conflict, easing concerns about supply disruptions from the oil-rich Middle East.
Days before this week’s Eid vacation, Israeli and Hamas teams met in Egypt to resume cease-fire negotiations, while Israel withdrew some of its troops from southern Gaza.
These steps have succeeded in easing tension in the region, and come after the United States urged Israel to ease its offensive against Gaza because of human rights violations.
Oil prices reached five-month highs last week on expectations of dwindling supply.
