New York Stock Market Rises Early This Week Ahead of CPI and Retail Sales Data

The three major indices of the U.S. New York stock market showed a simultaneous upward trend within a steady range on Monday, the first trading day of the week, as concerns about tightening eased. This week, key indicators that could influence the Federal Reserve's (Fed) monetary policy direction, such as the Consumer Price Index (CPI), retail sales, and the University of Michigan Consumer Sentiment Survey, are scheduled to be released.

At around 10 a.m. local time at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average, composed of blue-chip stocks, was trading at around 34,655, up 78.46 points (0.23%) from the previous close. The large-cap S&P 500 index rose 16.36 points (0.37%) to 4,473, while the tech-heavy Nasdaq index gained 77.39 points (0.56%) to 13,838.

Currently, discretionary consumer goods, materials, and related stocks are showing notable gains within the S&P 500. Tesla jumped more than 6% after Morgan Stanley upgraded its investment rating. Qualcomm rose over 3% following Apple’s decision to delay developing its own communication chips and extend its supply contract to use Qualcomm chips for another three years. Meta Platforms increased nearly 2% amid reports of developing a new AI system. Apple, which is set to launch the new iPhone 15 the next day, continued to decline within a steady range due to recent concerns originating from China. JM Smucker fell more than 7% on news of acquiring Hostess.

[Image source=Reuters Yonhap News]

Investors are awaiting the release of key indicators this week to gauge the future direction of the Fed’s monetary policy. The Wall Street Journal (WSJ) reported the previous day that confidence among Fed officials regarding the need for further rate hikes is gradually waning, which has somewhat eased tightening concerns.

On the 13th, the U.S. August CPI will be released. With recent oil price increases, the August CPI inflation rate is expected to slightly exceed the previous month’s rise, hovering around 3.6%. The core CPI, which excludes volatile energy and food prices, is forecasted to slow to the low 4% range. On the 14th, the U.S. August Producer Price Index (PPI), a wholesale price indicator, will be published. Retail sales for August will also be announced on the same day. Wall Street expects that retail sales, which had previously rebounded, may slow down this time. On the 15th, the University of Michigan Consumer Sentiment Survey will be released.

According to the Chicago Mercantile Exchange (CME) FedWatch, as of the morning of the same day, federal funds futures markets still reflect over a 93% probability that the Fed will hold rates steady in September. The probability of a hold in November stands at around 56%. However, if inflation indicators such as the CPI released this week exceed market expectations, the possibility of additional rate hikes could gain renewed momentum. The remaining Federal Open Market Committee (FOMC) meetings this year are scheduled for September, November, and December.

Chris Larkin of Morgan Stanley said, "This week is likely to be a story of 'good news is good, bad news is bad,'" adding, "The market’s short-term rebound depends on this week’s inflation data, especially the CPI." He noted, "If the data comes in hotter than expected, the Fed may adopt a more hawkish stance, increasing concerns about rate hikes."

In the New York bond market, Treasury yields are rising. The benchmark 10-year U.S. Treasury yield is trading around 4.29%, while the 2-year Treasury yield, which is sensitive to monetary policy, is around 4.99%. The dollar index, which measures the value of the U.S. dollar against six major currencies, has fallen nearly 0.6% to 104.4 compared to the previous close.

The market is also paying attention to the news of Apple’s iPhone 15 launch. As the company with the largest market capitalization, Apple’s stock movements are considered a factor that can influence the overall market sentiment. Last week, Apple’s stock plunged following China’s ban on the iPhone, which worsened investor sentiment across the tech sector. Meanwhile, with the September 30 deadline approaching, the U.S. Congress will begin discussions on the fiscal year 2025 budget this week.

This week, the European Central Bank (ECB) is also scheduled to hold a monetary policy meeting, with expectations currently favoring a rate hold. Additionally, geopolitical risks are drawing attention as a meeting between North Korean Supreme Leader Kim Jong-un and Russian President Vladimir Putin is expected to take place during the annual Eastern Economic Forum (EEF) hosted by Russia.

European stock markets are also showing gains within a steady range. Germany’s DAX index is trading up 0.52%, France’s CAC index is up 0.76%, and the UK’s FTSE index has risen 0.21% compared to the previous close.