New York Stock Market Hits Record High Ahead of Big Tech Earnings and PCE... Early Session Gains

The three major indices of the U.S. New York stock market are all showing upward trends in early trading on Monday, the 22nd (local time). The strong momentum continues from last week's record high of the S&P 500 index. This week, earnings reports from big tech companies including Netflix will be in full swing. Releases of inflation indicators preferred by the Federal Reserve (Fed) and preliminary fourth-quarter GDP growth rates are also scheduled.

At around 10:05 a.m. at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average was trading at around 38,076, up 0.56% from the previous close. The large-cap-focused S&P 500 index was up 0.49% at 4,864, and the tech-heavy Nasdaq index was up 0.69% at 15,414.

Currently, nine of the eleven sectors in the S&P 500, excluding energy and consumer staples, are all rising. Real estate-related stocks are up more than 1%. SolarEdge rose more than 10% from the previous close after announcing a 16% reduction in staff to cut costs. Department store chain Macy's rose nearly 4% on news that it rejected acquisition offers from Arkhouse Management and Brigade Capital Management. Food processing company Archer-Daniels-Midland plunged nearly 20% due to disappointing fourth-quarter earnings guidance and the CFO being placed on administrative leave. Apple is showing a rise close to 2%.

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Investors are focusing on whether the strong momentum in the New York stock market, including the S&P 500 which recently hit record highs, will continue as they await the release of December's Personal Consumption Expenditures (PCE) price index, preliminary fourth-quarter GDP growth rate, Purchasing Managers' Index (PMI), and corporate earnings including those of big tech companies this week. Ahead of the January Federal Open Market Committee (FOMC) meeting, with the blackout period in effect and no public remarks from Federal Reserve officials, investors are expected to gauge the future direction of the economy and monetary policy through these indicators and earnings reports.

The core PCE for December, to be released on the 26th, is expected to rise 0.2% month-over-month, slightly exceeding the previous month's increase. However, it is forecasted to show a slowdown with a 3% increase year-over-year. The preliminary U.S. fourth-quarter GDP, released a day earlier, is expected to slow to around 1.9%. If growth falls short of expectations, concerns about the economic outlook could intensify. However, weaker economic data could also rekindle market expectations for an early rate cut. If mixed indicators are confirmed, the Fed is likely to maintain a wait-and-see stance for an extended period.

Market expectations for an early rate cut have somewhat diminished. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the futures market currently prices in about a 41% chance that the Fed will hold rates steady in January and cut rates by at least 0.25 percentage points at the March FOMC meeting. This is a significant drop from over 80% a week ago. This decline is attributed to a series of hawkish remarks from Fed officials stating that market expectations for a March rate cut are excessive. Currently, the futures market favors a rate cut in May.

Additionally, this week will see earnings reports from big tech companies such as Tesla, Intel, and IBM. United Airlines will report earnings after the market close today. Alaska Air Group, which recently experienced a Boeing aircraft accident, will also release its earnings this week. According to FactSet, among S&P 500 companies that have reported so far, only 69% have met or exceeded market expectations. Paul Note of Murphy & Silvester Wealth Management said, "Looking back over the past two years, Fed actions have driven the market," but added, "It will change significantly depending on the earnings season that kicks off this week."

In the New York bond market, Treasury yields are declining. The benchmark 10-year U.S. Treasury yield is around 4.09%, and the 2-year yield, which is sensitive to monetary policy, is around 4.38%. The dollar index, which measures the value of the U.S. dollar against six major currencies, is steady at around 103.2. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's fear gauge, has risen more than 2% to 13.6.

International oil prices are on the rise. The February West Texas Intermediate (WTI) crude oil price is trading above $74 per barrel, up more than 1.8% from the previous close.

European stock markets are also rising. Germany's DAX index is up 0.74%, the UK's FTSE index is up 0.44%, and France's CAC index is up 0.65%.