[New York Stock Market] Rising Close Ahead of CPI Announcement... Dow Up 0.93%

The three major indices of the U.S. New York stock market all closed higher on the 11th (local time) ahead of the release of the June Consumer Price Index (CPI), buoyed by expectations of slowing inflation.

On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average closed at 34,261.42, up 317.02 points (0.93%) from the previous session. The S&P 500, which is centered on large-cap stocks, rose 29.73 points (0.67%) to 4,439.26, and the tech-heavy Nasdaq index closed up 75.22 points (0.55%) at 13,760.70.

All sectors in the S&P 500 recorded gains. In particular, energy-related stocks jumped more than 2%, supported by rising international oil prices. Utilities, financials, real estate, and telecommunications sectors also rose more than 1%. The U.S. court dismissed the Federal Trade Commission (FTC)'s injunction request to block Microsoft (MS)'s acquisition of Activision Blizzard, causing Blizzard's stock to surge over 10%. Real estate platform Zillow rose 10.77% after Piper Sandler upgraded its investment rating to overweight. Salesforce climbed nearly 4% on news of price increases for its cloud-based products. Meanwhile, JetBlue fell more than 2% after Evercore ISI downgraded its investment rating to underweight.

[Image source=Reuters Yonhap News]

Investors showed caution as they awaited inflation indicators such as the CPI and Producer Price Index (PPI) scheduled for this week, along with Q2 corporate earnings reports. With the Federal Reserve (Fed) expected to resume raising interest rates at this month's FOMC meeting, investors are focusing on the Fed's subsequent moves. Especially since last week's labor market data showed mixed signals, the June CPI to be released the next day is expected to play a key role in gauging the Fed's future tightening path. Wall Street expects the June CPI to rise 0.3% month-over-month and 3.1% year-over-year, continuing the trend of slowing inflation.

Currently, the market consensus favors a rate hike in July followed by a pause in September. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) futures market reflected about a 93% probability of a July baby step (a 0.25 percentage point rate hike) as of that afternoon. The probability of a pause in September stood in the 70% range. Unlike the Fed, which hinted at two additional hikes this year in the June dot plot, the likelihood of an additional baby step in September was only around 24%. However, if inflation indicators come in strong, as Fed Chair Jerome Powell has warned, consecutive hikes in July and September cannot be ruled out. In that case, downward pressure on the New York stock market is expected.

Fed officials' remarks continue. Ahead of the blackout period before the FOMC meeting, Minneapolis Fed President Neel Kashkari and Atlanta Fed President Raphael Bostic are scheduled to speak the next day. The previous day, Cleveland Fed President Loretta Mester and San Francisco Fed President Mary Daly expressed the need for further rate hikes due to high inflation.

The earnings season kickoff for Wall Street is typically marked by major banks such as JPMorgan, Wells Fargo, and Citigroup, whose earnings reports begin on the 14th. PepsiCo, Delta Air Lines, and UnitedHealth are also scheduled to report earnings this week. Current earnings forecasts are not favorable. According to FactSet, net income for S&P 500-listed companies in Q2 is estimated to decline 7.2% year-over-year. This would mark three consecutive quarters of negative growth since Q4 last year.

In the New York bond market that day, Treasury yields declined. The yield on the 10-year U.S. Treasury note hovered around 3.97%, while the 2-year Treasury yield was near 4.89%. The dollar index, which measures the value of the U.S. dollar against six major currencies, fell nearly 0.3% to around 101.6.

International oil prices rose. On the New York Mercantile Exchange, the August delivery West Texas Intermediate (WTI) crude oil price closed at $74.83 per barrel, up $1.84 (2.52%) from the previous session. This closing price was the highest since May 1.