Wall Street Sees Gains as Investors Turn Focus to Upcoming Economic Reports

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In a shift of attention from the Federal Reserve's recent actions, the stock market saw a notable rise in trading activity on Wall Street during Monday's afternoon session. The momentum has transitioned towards corporate and economic reports, with major indices reflecting positive movement.

The S&P 500 exhibited a 0.3% increase, maintaining the upward trajectory it initiated in its inaugural winning week since July. Tracking this positive sentiment, the Dow Jones Industrial Average advanced by 110 points, or 0.3%, reaching 34,458 as of 2:29 p.m. Eastern Time. Similarly, the Nasdaq experienced a 0.5% climb.

Noteworthy in the week's unfolding narrative, Wall Street concluded its most recent cycle of earnings reports, with the forthcoming week anticipated to spotlight Best Buy and Costco's performance results.

Among individual stock movers, 3M commanded attention with a notable 5% surge. This upturn followed reports of the company's agreement to a $5.5 billion settlement pertaining to defective earplugs, a figure notably lower than initial expectations. In a similar stride, Boston Scientific marked a 5.5% rise, propelled by an encouraging update provided to investors regarding a pivotal heart device study.

However, a more pronounced leap was witnessed in the shares of Hawaiian Electric, soaring by 43.5%. This surge came on the heels of the utility company's proactive stance against allegations that it played a role in sparking a devastating wildfire in the Lahaina community. Hawaiian Electric swiftly countered the claims, asserting that power supply to the lines in the fire-affected region had been severed hours prior to the inferno's ignition. This refutation stood in stark contrast to a lawsuit filed by Maui County the previous week. Despite this surge, it is pertinent to note that the company's shares still recorded a decline of approximately 64% over the past three weeks.

As investors brace themselves for a bustling week, a slew of economic reports are poised to illuminate the employment landscape while probing the persistence of inflation's ebb. These insights could potentially offer cues as to the Federal Reserve's stance on interest rates, gauging whether they will remain steady or witness further adjustments before the year's closure.

The week's agenda features a spotlight on consumer confidence slated for Tuesday. This parameter, which experienced a significant uptick in July, is projected to maintain its robustness throughout August.

On Tuesday, the government is scheduled to unveil its comprehensive report on job openings for July, followed by the broader jobs report for August on Friday. As the job market continues to stand resilient amid inflatory pressures, its performance garners heightened attention, representing a bulwark against the specter of recession.

A crucial focal point for both investors and economists lies in the government's imminent update on inflation, set to emerge on Thursday. Of particular relevance is the report on personal consumption and expenditures, revered as the Federal Reserve's preferred barometer for tracking inflation trends and guiding its endeavors to anchor inflation at a 2% benchmark. In June, this report indicated a 3% uptick in inflation, a trajectory that is expected to witness a marginal upswing to 3.3% in the July release. Importantly, this reflects a moderation from the elevated 7% levels registered a year ago.

Wrapping up the previous week, investors found solace in the measured tones of Fed Chair Jerome Powell, who articulated the central bank's intent to tread cautiously on the terrain of interest rates.

Brian Price, the head of investment management at Commonwealth Financial Network, encapsulated prevailing sentiment, stating, "The general consensus is that we're drawing closer to the culmination of the interest rate hike cycle."

In the backdrop of this sentiment, the central bank's maneuvers merit attention. Having already elevated its key interest rate to its loftiest point since 2001, the Federal Reserve's pursuit of taming surging inflation is evident. This ascent contrasts starkly with the near-zero levels observed in the early months of the prior year. In the most recent policy conclave, the central bank maintained the status quo on rates; however, the caveat of potential future rate hikes lingers as a tool to counter persistent inflationary pressures.

The market's trajectory is pinned on its anticipation that the Federal Reserve will uphold prevailing rates during its September session, a notion corroborated by CME's FedWatch tool. Interestingly, wagers remain almost evenly split regarding the prospect of a further rate hike before the curtains draw on 2023.

Echoing this stance, Powell remarked on Friday that forthcoming decisions would be inextricably tethered to the insights gleaned from incoming data on the economic landscape.

In the realm of bonds, yields exhibited a mixed performance. The yield on the 10-year Treasury experienced a slight decline, settling at 4.22% from the 4.24% marker at the close of the previous Friday. Meanwhile, the yield on the 2-year Treasury, revered as a close indicator of market expectations for the Federal Reserve, exhibited a dip to 5.06% from the preceding Friday's 5.08%.

Shifting focus to international markets, Asia saw a broad-based upswing, mirroring positive sentiment. A pivotal development emerged from China, where the requirement for a negative COVID-19 test result for incoming travelers was abolished. This significant milestone marks the country's ongoing trajectory of reopening its borders to the global community after initiating a phase of isolation in 2020.

Simultaneously, European markets charted their own course of gains, contributing to the global sentiment of cautious optimism.

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