US stocks were lower on Monday morning when the People’s Bank of China slashed its rate on a one-year loan from 2.85% to 2.75% and added an additional 400 billion yuan in debt markets after government data showed July factory output. $60 billion). retail sales weak
US stocks posted gains for the week on Friday along with major indices as investors showed signs of a slowdown in inflation.
The S&P 500 and Nasdaq Composite both gained for the fourth week in a row. It is their longest stretch since a streak that ended in early November, when the two rose for five consecutive weeks.
Investors expect the recent slowdown in consumer-price growth to encourage the Federal Reserve to raise interest rates at a slower pace, which in turn could prevent the economy from heading into recession.
Lower rates drive prices up for more speculative assets like stocks, bonds and cryptocurrencies, and stocks have swung this year in part due to the Fed’s aggressive rate hikes.
Although inflation is still close to the highest level in decades, Wednesday’s data showed it eased at 8.5% in July, compared to 9.1% in July.
Thursday’s data showed US suppliers raised prices at the slowest annual pace since the previous fall in July, buoyed by a slump in energy prices.
On Friday, the S&P 500 was up 72.88 points, or 1.7%, at 4280.15. The Nasdaq Composite jumped 267.27 points, or 2.1%, to end at 13047.19. The Dow Jones Industrial Average rose 424.38 points, or 1.3%, to 33761.05. The Dow rose 2.9% for the week. The Nasdaq and S&P 500 were up more than 3% for the week.
Investors will pay additional attention to Walmart, Target, Lowes, TJ Maxx and Ross Stores’ second-quarter earnings reports and the health of US consumers, providing some clarity on the impact of inflation on corporate profits.
Market management will also focus on guidance to confirm recent data, in which inflation is peaking.
In addition, the New York Federal Reserve will kick off this week’s economic report at 8:30 a.m. ET Monday with a closely-watched gauge of regional manufacturing activity.
The Empire State Manufacturing Survey expects it to fall to 5.5 in August, from a stronger-than-expected reading of 11.12 last month when it exited contraction territory (a number above zero means more New York-area manufacturers say that business conditions are improving) rather than deteriorating.)
Also many housing related reports are going to come this week.
At 10 p.m. ET, the National Association of Homebuilders will release its housing market index for August. After falling higher than expected from that level last month after high inflation and mortgage rates hurt home sales and buyer traffic, the homebuilder sentiment gauge is projected to hold steady at 55, the lowest since May 2020. This would indicate that more than half of NAHB members consider business conditions to be good.
Other reports to watch this week are Housing Starts and Building Permits on Tuesday, and Current Home Sales on Thursday, both for the month of July.
Meanwhile, shares in Asia were mixed after China cut key interest rates and Japan reported that its economy expanded at a faster pace in the last quarter.
Tokyo and Sydney advanced while Hong Kong and Shanghai fell.
Tokyo’s Nikkei 225 index rose 1.1% to 28,871.78 and Sydney’s S&P/ASX 200 rose 0.4% to 7,062.50. Tea
The Shanghai Composite Index ended 0.1% lower at 3,275.34, while Hong Kong’s Hang Seng index gained 0.4% to end at 20,092.37.
Markets in South Korea remained closed for the holiday.
Bangkok’s SET index rose 0.4% after the Thai government expanded the economy at a 0.7% quarterly pace in April-June, slowing from 1.1% growth in the first quarter of the year.