NEW YORK (AP) — Stocks rose Monday afternoon on Wall Street as the campaign winds down for the U.S. midterm elections that will determine which party controls Congress.
The S&P 500 was up 0.9% at 2:33 p.m. ET. The Dow Jones Industrial Average rose 439 points, or 1.4%, to 32,843 and the Nasdaq rose 0.9%.
Apple is little changed from an earlier slump after the company warned customers they will have to wait longer for the latest iPhones after antivirus restrictions were imposed on a contractor’s factory in China. Facebook’s parent company jumped 5% after the Wall Street Journal reported that the company plans a big round of layoffs this week.
Cruise lines and other travel-related companies fell. Norwegian Cruise Line, which reports financial results on Tuesday, fell 1.6%.
Bond yields increased. The 10-year Treasury yield rose to 4.20% from 4.16% on Friday. The two-year Treasury yield rose to 4.73% from 4.66%.
Elections on Tuesday will decide control of Congress and key governorships. History suggests the ruling party may suffer losses in the midterms, and decades-high inflation has become a major problem for Democrats. Markets typically prefer a mixed balance of power that amounts to few major changes in policy.
Stubbornly high inflation and the Federal Reserve’s policy of raising interest rates to combat it remain major concerns on Wall Street. Investors will get an important update on inflation on Thursday when the US government releases its October consumer price report.
The price update will show where consumers are being pressured by inflation. More importantly, it could give investors more insight into the Fed’s way forward to combat inflation, said Keith Buchanan, portfolio manager at Globalt Investments.
“It all comes down to one question,” he said. “What impact has the Fed’s tightening had on inflation?”
Wall Street expects consumer prices to rise 8% in October from a year earlier, which would represent a slight cooling off from an 8.2% rise in September.
The central bank has signaled it could slow the pace of rate hikes as it determines the impact of its policy so far. The Fed has also said it may ultimately have to raise rates more than anticipated if inflation persists.
Wall Street is evenly split between expectations of a half percentage point increase and a three-quarter percentage point increase at the next central bank meeting in December, according to CME Group. He is also evenly divided on whether the central bank ultimately raises rates to a range of 5% to 5.25% or 5.25% to 5.50% next year.
The policy has raised concerns that the Fed could go too far in slowing the economy and triggering a recession.
“The lags are different every cycle and for different reasons and we just don’t know when the tightening will have the impact it was intended to have,” Buchanan said.
The latest round of corporate earnings has provided mixed financial results and warnings from companies about the impact of inflation on operations and demand for goods and services. More than 85% of S&P 500 companies have reported their latest earnings and overall growth is expected to exceed 2.7%, according to FactSet.
The cautious and weak forecasts have had their impact on Wall Street’s expectations for the rest of the year. Analysts have sharply lowered their earnings growth expectations for the current quarter and now forecast a contraction of around 1.4%. They had forecast growth of more than 8% in June.
Several big companies will report results this week, including Walt Disney on Tuesday.
Markets gained ground in Asia amid continued speculation of a possible relaxation of China’s zero COVID strategy, although there has been no official confirmation from China of a major change.
European markets were mostly higher.
Yuri Kageyama and Matt Ott contributed to this report.
Copyright 2022 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.