By Stephen Culp
NEW YORK (Reuters) -U.S. stocks closed sharply higher on Monday and the dollar strengthened as markets awaited key data and action from central banks.
All three major U.S. stock indexes rose more than 1%, with the Dow Jones and the Dow ending a four-session losing streak, recovering from their biggest weekly percentage losses since March 2022.
The tech-laden Nasdaq staged a comeback after posting its biggest Friday-to-Friday decline since January 2022 last week.
The dollar strengthened ahead of Wednesday’s highly anticipated Consumer Price Index report.
“Two things are happening,” said Greg Bassuk, CEO of AXS Investments in New York. “Investors are putting their money to work again after last week’s oversell, and secondly, everyone is optimistic about a Fed rate cut.”
“There’s a lot of dip buying and Fed optimism today,” Bassuk added.
Last week’s mixed data, particularly the August employment report, caused investors to revise their expectations that the US Federal Reserve could deliver an outsized 50 basis point rate cut when it meets for its policy meeting next week.
On Wednesday, the Labor Department’s consumer price index is expected to show underlying inflation remaining on its meandering path toward the central bank’s 2% target.
At the end, financial markets have priced in a 71% probability that the Fed will cut its key policy rate by 25 basis points at the end of next week’s meeting, with a 29% probability of a 50 basis point cut, according to FedWatch of CME. tool.
The S&P 500 rose 484.28 points, or 1.2%, to 40,829.69, the S&P 500 gained 62.65 points, or 1.16%, to 5,471.07 and added 193.77 points, or 1 .16%, to 16,884.60.
European shares staged a comeback, with the benchmark recovering from last week’s steep declines as investors awaited an expected rate cut from the European Central Bank later this week.
“Last week saw a lot of weak economic data in the US and globally, and this left investors skittish over recession fears,” Bassuk said.
“With dip buying and increased confidence that many central banks will move from aggressive to accommodative policies, there is more optimism that central banks can avoid a global recession.”
The pan-European STOXX 600 index rose 0.82% and the MSCI index of shares around the world rose 0.58%.
Emerging market stocks lost 1.07%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.13% lower, but lost 0.48%.
Here’s a look at the world stock indices as of Friday’s close:
U.S. Treasury yields wobbled in choppy trading amid uncertainty over the size of the Fed’s expected rate cut this month.
Benchmark 10-year bonds last rose 1/32 in price to yield 3.7061%, up from 3.71% late Friday.
The 30-year bond last rose 8/32 in price to yield 4.0066%, up from 4.02% late on Friday.
The dollar regained strength against a basket of global currencies as investors looked ahead to key inflation data and lowered expectations for the size of next week’s policy rate cut.
The rate rose 0.41%, while the euro fell 0.42% to $1.1037.
The Japanese yen weakened 0.48% against the dollar at 143.01 per dollar, while the British pound last traded at $1.3072, down 0.39% on the day.
Crude oil rose as supply concerns following the forecast of a hurricane that hit Louisiana this week helped oil prices recover from last week’s heavy losses.
rose 1.54% to $68.71 per barrel from $71.84 per barrel, up 1.10% on the day.
Gold prices pared gains but held steady as investors waited for key inflation data.
added 0.4% to $2,505.75 an ounce.
