Written by Carolyn Valitkiewicz
NEW YORK (Reuters) – Most stock indexes fell on Monday, while 10-year U.S. Treasury yields touched their highest levels in 14 months, as the resilient U.S. economy and persistent inflation prompted investors to consider the possibility that the Federal Reserve (the U.S. central bank) might halt its cycle. Monetary easing.
It recorded its highest level in more than two years. The Nasdaq index fell, while the benchmark index rebounded from its lowest level in two months to end with slight gains.
Investors are eagerly awaiting the US Consumer Price Index reading on Wednesday. Any upside surprises could fuel fears that the Fed may pause interest rate cuts. A Reuters poll of economists gives an average forecast for an annual rise of 2.9%, up from 2.7% in November, and for a monthly increase of 0.3%.
Producer price data in the United States is scheduled to be released on Tuesday.
On Friday, the December employment report showed 256,000 workers added to U.S. nonfarm payrolls, the largest increase since March and well above expectations for a rise of 160,000.
Investors also fear whether inflation may rise as a result of the policies on tariffs, immigration and taxes pursued by the incoming administration of US President-elect Donald Trump.
Markets are pricing in cuts of around 27 basis points from the Fed this year, with a 52.9% chance of a June cut.
“Things are going to be pretty tight over the next couple of days until we get the inflation news out of the way,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“The Fed has become more hawkish at this time,” Cardillo added, and investors are considering the possibility that the US may have seen the end of interest rate cuts for now.
The Fed's next policy meeting is scheduled for January 28-29.
The yield on the benchmark 10-year bond touched a 14-month high of 4.805%, and was last up 1.6 basis points to 4.79%.
On Wall Street, the index rose 358.67 points, or 0.86%, to 42,297.12 points, the S&P 500 index increased 9.18 points, or 0.16%, to 5,836.22 points, and the index fell 73.53 points, or 0.38%, to 19,088.10 points.
The MSCI Worldwide Stock Index fell 2.07 points, or 0.25%, to 831.79. The index decreased by 0.55%.
Q4 earnings reporting season also begins in the US this week with expected results from some of the biggest US banks including JPMorgan Chase (NYSE:).
“The question investors face is what is more important — strong corporate earnings, which come from a strong economy, or low inflation, which comes from a weaker economy,” said Oliver Burch, senior vice president and advisor at Wealthspire Advisors in Westport. Connecticut.
“Most investors prefer a strong economy with slightly high inflation,” he said.
Helping both the Dow and S&P 500 was a 3.9% gain in UnitedHealth Group (NYSE:) shares, and President Joe Biden's administration has proposed 2026 reimbursement rates for Medicare Advantage plans run by private insurers, which would result in a 2.2% increase. In payments.
The US currency index, which measures the greenback against a basket of currencies, rose 0.26% to 109.94. Earlier in the session, it rose to its highest levels in more than two years, peaking at 110.17, adding to its recent rise.
The euro fell 0.23 percent to $1.022. Against the Japanese yen, the dollar fell by 0.03% to
157.64.
The jump in energy prices increased investors' concerns about inflation.
Oil prices rose about 2% to a four-month high, as traders expected that broader US sanctions on Russian oil would force buyers in India and China to look for other suppliers.
The price of a barrel of oil rose by $2.25 to settle at $78.82, and it also rose to $1.25 to settle at $81.01.
As the dollar rose, gold fell 0.9 percent to $2,664.49 per ounce. Gold generally struggles to compete for investors' money in a high-yield and rising dollar environment.
