Stocks Rise for Second Day Ahead of US Midterms: Markets Roundup

Stocks Rise for Second Day Ahead of US Midterms: Markets Roundup

(Bloomberg) — U.S. stocks rose in a broad-based rally that swept away small-cap and blue-chip stocks ahead of midterm elections and inflation data later this week. . The dollar fell with Treasury bonds.

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The S&P 500 closed near session highs, with all but three of 11 industry groups advancing. The big-tech Nasdaq 100 also grabbed bids, while the Dow Jones Industrial Average outperformed, rising as much as 1.5% with healthcare names topping the leaderboard. The Russell 2000 rallied, reversing losses in afternoon trading.

Stocks rose for a second day ahead of the US midterms. Morgan Stanley’s Michael Wilson said polls pointing to Republicans winning at least one house of Congress provide a potential catalyst for lower bond yields. and higher stock prices.

“Has the stock market been voting early?” said Ed Yardeni, founder of his namesake research firm, referring to the S&P 500’s rebound from an October low. “Tomorrow’s midterms may push stock prices even higher in the coming months if history is any guide. Our soft landing economic outlook, if it pans out (60% subjective probability), may be another wind at the stock market’s back.”

Read more: Wall Street expects history to repeat itself with a post-election comeback

Optimism, for the time being, is outweighing concerns about the Fed’s resolute campaign against price increases, signs of stress on US corporate performance, and China’s announcement that it will adhere “firmly to ” to the current Covid Zero policy.

Meanwhile, Facebook’s parent company, Meta Platforms Inc., has rebounded from plans to cut jobs. Tesla Inc. was the biggest drag on the S&P 500 as shares continued to sell off in the wake of CEO Elon Musk’s purchase of Twitter Inc. Apple Inc. recovered from earlier losses triggered by a report that said it expected to produce at least three million fewer iPhone 14 phones than originally forecast this year.

Lyft Inc. fell in after-market trading after the ride-sharing giant reported weaker-than-expected passenger growth, overshadowing better gains from higher fares.

Stocks rose on Friday after data showed strong hiring and wage increases along with higher unemployment. That offered a mixed picture for Fed officials debating how long to extend their campaign to rein in high inflation.

Swap markets are tipping toward a 50 basis point Fed interest rate hike in December, after a fourth straight huge hike to a 3.75%-4% target range at last week’s meeting. . Rates are expected to peak at just over 5% in mid-2023.

The latest US inflation reading to be released on Thursday will be closely watched after the core consumer price index rose more than expected to a 40-year high in September. Even if prices start to moderate, the CPI is well above the Fed’s comfort zone.

“Since we may not know the answer to what the composition of Congress will be this week, Thursday’s CPI number will be very important once again,” Matt Maley, chief market strategist at Miller Tabak + Co., said in an email. a note. “Even if we do get a better-than-expected CPI later this week, the odds are high that it will only rebound in the very short term. Before long, the stock market should flip once again.”

In the corporate debt market, Oracle Corp.’s long-awaited acquisition financing is leading 15 high-grade US issuers looking to get ahead of Thursday’s consumer price index data and the US market holiday. bonds on friday.

Meanwhile, US-listed Chinese stocks fell on Monday after health authorities reiterated their strict adherence to the country’s Covid Zero policies. The Nasdaq Golden Dragon China Index fell more than 2%, halting a four-day rally.

Key events this week:

  • Euro zone retail sales, Tuesday

  • Midterm elections in the United States, Tuesday

  • EIA Oil Inventory Report, Wednesday

  • China Aggregate Financing, PPI, CPI, Money Supply, New RMB Loans, Wednesday

  • US Wholesale Inventories, MBA Mortgage Applications, Wednesday

  • Fed officials John Williams and Tom Barkin speak at events Wednesday

  • US CPI, US Initial Jobless Claims, Thursday

  • Fed officials Lorie Logan, Esther George, Loretta Mester speak at events Thursday

  • US University of Michigan Consumer Sentiment, Friday

Some of the main movements in the markets:

Stocks

  • The S&P 500 was up 1% at 4 p.m. New York time

  • The Nasdaq 100 rose 1.1%

  • The Dow Jones Industrial Average rose 1.3%

  • MSCI World Index rose 1.1%

coins

  • The Bloomberg Dollar Spot Index fell 0.4%

  • The euro rose 0.6% to $1.0021

  • The British pound rose 1.2% to $1.1514

  • The Japanese yen was little changed at 146.60 per dollar

CRYPTOCURRENCIES

  • Bitcoin fell 1.6% to $20,794.56

  • Ether fell 0.2% to $1,600.58

Captivity

  • The 10-year Treasury bond yield advanced six basis points to 4.22%

  • Germany’s 10-year yield advanced five basis points to 2.34%

  • Britain’s 10-year yield advanced 10 basis points to 3.64%

raw Materials

–With the assistance of Michael G. Wilson, Tassia Sipahutar, Srinivasan Sivabalan, and Isabelle Lee.

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