Updated at 12:02 pm EST
U.S. stocks moved higher Monday, while the dollar retreated against its global peers and oil priced jumped, as investors plotted a cautious return to risk markets amid fading Federal Reserve rate bets and a busy week for domestic corporate earnings.
Big boosts from Goldman Sachs (GS) – Get Goldman Sachs Group Inc. (The) Report, which posted better-than-expected second quarter earnings and boosted its quarterly dividend, as well as Boeing (BA) – Get The Boeing Company Report, which agreed a multi-billion sale of 130 737 Max jets to Delta Air Lines (DAL) – Get Delta Air Lines Inc. Report, added to the market’s early gains.
Soothing comments from some key Fed officials, as well as a surprise pullback in inflation expectations from Friday’s University of Michigan consumer sentiment survey, sparked a solid rally on Wall Street that has shifted into global markets to kick-off the week.
The CME Group’s FedWatch tool now suggests a 70% chance of a 75 basis point rate hike when the central bank meets next week in Washington, with firmer bets emerging for a smaller 25 basis point move in September.
Central bank rate decisions will likely loom large this week, with the European Central Bank set for its first rate increase in eleven years on Thursday — just hours after the Bank of Japan’s regular policy meetings — as investors look for catalysts to slow the relentless surge in the U.S dollar, which hit another 20-year high late last week.
The dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.78% lower at 107.227, a move that triggered an overnight rebound in global crude markets.
Earnings, however, are likely to provide the key market catalyst this week as a largely empty economic data calendar, as well as a blackout on Fed speakers, gives way to host of blue-chip quarterly updates across several major sectors.
Around 72 S&P 500 companies are expected to report June quarter earnings this week, with Bank of America and Goldman Sachs ounding out the financial sector and Netflix (NFLX) – Get Netflix Inc. Report, IBM and Twitter getting things started on the tech side. Tesla will also provide June quarter details this week, with investors looking for both the impact of its Shanghai production shutdown in April and the likely multi-billion writedown of its bitcoin holdings.
Collective S&P 500 profits are expected to rise 5.6% from last year to a share-weighted $465 billion, according to data from Refinitiv, although stripping away what is expected to be a record season for the energy sector and that tally falls to -3.4%.
Oil was also on the march following President Joe Biden’s weekend meeting in Saudi Arabia, which didn’t yield any firm commitment from the Kingdom to either increase its domestic production or influence the OPEC cartel to do the same.
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WTI futures for August delivery, which are closely-linked to U.S. gas prices, were marked $4.19 higher at $101.78 per barrel while Brent crude for September, the global pricing benchmark, rose $4.59 to $105.79 per barrel.
In overseas markets, Asia stocks got a boost from hints of monetary stimulus from the People’s Bank of China, where Covid infections continue to rise and the economy narrowly avoided contraction last quarter, with the MSCI ex-Japan benchmark rising 1.8% into the close of the session.
In Europe, the Stoxx 600 was marked 0.85% higher by the close of trading in Frankfurt while the euro rebounded from last week’s fall below parity against the greenback to trade at 1.0163.
In the U.S., benchmark 2-year Treasury note were last seen trading modestly higher at 3.185% in New York dealing, against 3.015% for 10-year notes, holding the so-called ‘inversion’ of the yield curve — an accurate predictor of recession — close to the steepest since December of 2000.
On Wall Street, the S&P 500 was marked 32 points higher in the opening hours of trading while the Dow Jones Industrial Average gained 182 points. The tech-focused Nasdaq gained 160 points.
Bank of America (BAC) – Get Bank of America Corporation Report posted softer-than-expected second quarter earnings Monday as investment banking slump washes over solid net interest income gains. Shares were up 1.1%.
Goldman umped 3.8% after it posted better-than-expected second quarter earnings as a big gain in global markets revenues offset a slump in investment banking fees.
Boeing shares powered 2.5% higher after Delta said it will buy at least 100 of the planemaker’s 737 Max jets to add to its expanding fleet.
General Electric (GE) – Get General Electric Company Report jumped 2.7% after unveiling the names of its three new business units Monday as it powers ahead with its historic decision to split the industrial group into three separate public companies.
Twitter (TWTR) – Get Twitter Inc. Report shares edged 0.1% lower as Tesla (TSLA) – Get Tesla Inc. Report CEO Elon Musk stepped-up his fight in their $44 billion takeover battle by filing court papers against what he called an “unjustifiable request” for a speedy trial.
Alphabet (GOOGL) – Get Alphabet Inc. Report shares, meanwhile, moved 0.252% lower in their split-adjusted debut on the Nasdaq. Google unveiled its plans for a 20-for-1 stock split earlier this year, paying shareholders a special dividend of 19 shares for each one they owned, with the adjustments taking place after the close of trading on Friday.
International Business Machines (IBM) – Get International Business Machines Corporation Report will kick-off the unofficial start to the tech earnings season after the close of trading with investors likely focused on the growth in the group’s expanding cloud division.
Analysts expected IBM to post June quarter earnings of $2.27 per share, a 2.6% decline from last year, on overall revenues of $15.185 billion, a 19% slump from the second quarter of 2021.