U.S. stocks edged higher Monday, consolidating after last week’s strong gains as investors await the release of the minutes of the latest Fed meeting as well as the Jackson Hole central bank symposium, for clues over future monetary policy. .
By 09:35 ET (13:35 GMT), the Dow Jones Industrial Average was up 90 points, or 0.2%, S&P 500 traded 9 points, or 0.2%, higher and NASDAQ Composite climbed 8 points, or 0.1%.
Recession odds fall
The main Wall Street indices recorded their best week of the year last week, as recent positive data relieved worries over the prospect of a recession.
This rally came after a turbulent start to the month in the wake of the disappointing July nonfarm payrolls reading.
However, the non-manufacturing ISM index for July rebounded, with its employment component entering expansion territory for the first time since November 2023, economists noted.
Moreover, retail sales for July beat expectations, suggesting strong real consumption growth, and initial jobless claims have declined over the past two weeks.
Goldman Sachs has revised its 12-month U.S. recession probability to 20% from 25%, citing the recent economic data that shows no signs of a downturn.
The increase was positioned midway between the long-term average recession probability of 15%—based on the historical occurrence of a recession every seven years—and the 35% estimate during the bank turmoil in early 2023.
Investors will focus this week on the minutes from the Federal Reserve’s most recent meeting, which are due on Wednesday, ahead of Friday’s Fed Chair Jerome Powell’s Jackson Hole speech on Friday.
Earnings season to continue
The earnings season continues this week, with results due from cybersecurity company Palo Alto Networks (NASDAQ:PANW), retailer Target (NYSE:TGT) and home improvement chain Lowe’s (NYSE:LOW) are expected through the week.
Advanced Micro Devices (NASDAQ:AMD) stock fell 0.4% after the chipmaker said it plans to acquire server maker ZT Systems for $4.9 billion, to expand its portfolio of artificial intelligence chips and hardware.
B. Riley Financial (NASDAQ:RILY) stock slid over 6% following a drop of over 65% last week in the wake of its warning of a hit from its investment in Vitamin Shoppe-owner Franchise Group (NASDAQ:FRG).
Bank of America’s latest fund manager survey showed a decline in the proportion of investors overweight in stocks, dropping to 31% from 51%.
The survey also highlighted that 40% of Chief Investment Officers are pushing for CEOs to improve their companies’ balance sheets. Despite the ongoing AI boom, the desire for increased capital expenditures has fallen to 24%, the lowest level since November 2023.
Crude looks to Gaza ceasefire talks
Crude prices stabilized Monday as traders digest the restarting of ceasefire talks in the Middle East.
By 09:35 ET, the U.S. crude futures (WTI) climbed 0.1% to $75.61 a barrel, while the Brent contract traded largely flat at $79.65 a barrel.
Both benchmarks fell nearly 2% at the end of last week after data from China showed its economy lost momentum in July, with new home prices falling at the fastest pace in nine years, industrial output slowing and unemployment rising.
Attention turns now to Gaza ceasefire talks, which are set to continue this week in Cairo, following a two-day meeting in Doha last week.
U.S. Secretary of State Antony Blinken on Monday called the latest diplomatic push by Washington to achieve a ceasefire deal in Gaza “probably the best, maybe the last opportunity” and urged all parties to get the agreement over the finish line.
There has been increased urgency to reach a ceasefire deal amid fears of escalation across the wider region, an upsurge that could impact supply from this oil-rich region.
