[New York Stock Market] Rising Ahead of CPI... Dow Up 1.16%

The three major indices of the U.S. New York stock market all closed higher on Monday, the 7th (local time), as investors awaited this week's corporate earnings and inflation data releases.

On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average closed at 35,473.13, up 407.51 points (1.16%) from the previous session. The large-cap-focused S&P 500 index rose 40.41 points (0.90%) to 4,518.44, while the tech-heavy Nasdaq index gained 85.16 points (0.61%) to close at 13,994.40.

All ten sectors of the S&P 500, except for utilities, advanced. Telecommunications, real estate, industrials, healthcare, and financial stocks rose more than 1%. Berkshire Hathaway, led by Warren Buffett, surged over 3% from the previous session to hit an all-time high, buoyed by better-than-expected earnings and cash reserves. Elanco also jumped more than 4%, surpassing Wall Street expectations. Sobos Brands, the parent company of Rao, soared over 25% after food giant Campbell Soup announced acquisition plans. Amgen rose nearly 4%, driving the Dow's gains.

On the other hand, Tyson Foods fell nearly 4% due to disappointing earnings. Tesla slipped nearly 1% after its Chief Financial Officer (CFO), a close confidant of CEO Elon Musk and considered a potential next CEO candidate, abruptly resigned. Yellow, a U.S. trucking company with a 99-year history, slid about 30% after filing for bankruptcy protection.

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Investors are closely watching corporate earnings reports and movements in Treasury yields, while awaiting economic indicators scheduled for this week, including the July Consumer Price Index (CPI) and Producer Price Index (PPI), as well as remarks from Federal Reserve (Fed) officials. The mixed signals from last week's employment report have heightened attention on inflation data. The Wall Street Journal (WSJ) emphasized, "The main event this week is Thursday's CPI release," adding, "This could provide investors with more clues on whether the Fed will raise rates further this year." The Fed has previously raised the U.S. benchmark interest rate to its highest level in 22 years.

The U.S. July CPI, to be released on the 10th, is expected to rise 3.3% year-over-year and 0.2% month-over-month. Although the June CPI increase was the lowest in over two years at 3%, the July figure is anticipated to rebound. The July PPI, announced the following day, is also forecasted to turn positive after a 0.1% year-over-year decline the previous month. Should these inflation indicators come in higher than expected, concerns about Fed tightening could intensify, potentially leading to a market correction. Natashis Investment predicts the S&P 500 could drop up to 5%. Earnings from Walt Disney, Eli Lilly, and UPS are also scheduled for release this week.

Fed officials continue to provide hints about future monetary policy. Fed Governor Michelle Bowman, ahead of attending a Fed conference hosted by the Federal Reserve Bank of Atlanta, stated, "Additional hikes may be necessary to bring inflation down to the 2% target." The conference will address topics such as the impact of credit tightening on small businesses and labor market imbalances.

Conversely, John Williams, President of the New York Fed, in an interview released earlier this month by The New York Times (NYT), said, "Current rates are close to their peak," and suggested rate cuts could begin next year. Ahead of the Jackson Hole meeting at the end of this month, speeches are scheduled this week by Patrick Harker, President of the Philadelphia Fed, Thomas Barkin, and Thomas Bostic, President of the Richmond Fed. The New York Fed will also release reports on household debt and credit.

Market consensus favors a rate hold in September, buoyed by recent expectations of a soft landing. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) futures market reflected over an 86% probability this morning that the Fed will keep rates unchanged at the upcoming September FOMC meeting. The hold-until-year-end scenario is considered likely.

U.S. Treasury yields showed little movement. In the New York bond market, the 10-year Treasury yield edged up slightly to around 4.09%. The 2-year Treasury yield, sensitive to monetary policy, remained steady near 4.78%. Last week, the 10-year yield hit its highest level since October last year, digesting news of Fitch's downgrade of the U.S. credit rating. Investors are also watching whether the Treasury's announcement to increase third-quarter borrowing will affect Treasury yields this week. A $103 billion Treasury auction is scheduled.

The Dollar Index, which measures the value of the U.S. dollar against six major currencies, remained steady around 102. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," dropped over 7% to 15.8.

Ryan Beranzer, founder of Klao Advisors, noted, "Given the recent rise in gasoline prices over the past few weeks, the CPI may reflect this," advising that investors should remain cautious amid ongoing inflation and Fed tightening fears. Chris Harvey, Head of Equity Strategy at Wells Fargo, appearing on CNBC's Squawk Box, said, "As earnings season winds down, more volatility is approaching," adding, "Market volatility will not subside until rate cuts begin."

Oil prices fell for the first time in three trading days due to profit-taking pressure. On the New York Mercantile Exchange, September delivery West Texas Intermediate (WTI) crude closed at $81.94 per barrel, down 88 cents (1.06%) from the previous session.