A currency trader passes by the screens showing the Korea Composite Stock Price Index (KOSPI), center, and the foreign exchange rate between U.S. dollar and South Korean won, right, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Monday, Dec. 11, 2023. Asian shares were mixed on Monday after Wall Street touched a 20-month high, at the start of a week that includes essential U.S. inflation data and the Federal Reserve’s final rate decision of the year. (AP Photo/Ahn Young-joon)
NEW YORK – Stocks closed higher on Wall Street ahead of the Federal Reserve’s last meeting of the year. The S&P 500 rose 0.4% Monday. The Nasdaq composite rose 0.2% and the Dow Jones Industrial Average added 0.4%. Macy’s soared 19% following reports that an investor group is launching a bid to take the storied retailer private for $5.8 billion. Markets will get updates this week on inflation at the consumer and wholesale levels before the Fed’s meeting wraps up on Wednesday. Major stock indexes are on a six-week winning streak, with the S&P 500 up 20% for the year. Treasury yields held steady.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Stocks drifted higher in afternoon trading Monday on Wall Street ahead of the Federal Reserve’s last meeting of the year.
The S&P 500 was up 0.3%. The benchmark index hit its highest level in 20 months on Friday. The Dow Jones Industrial Average rose 114 points, or 0.3%, to 36,363 as of 3:08 p.m. Eastern. The Nasdaq composite edged up 0.2%.
The major stock indexes are on a six-week winning streak, with the S&P 500 up about 20% for the year and the Nasdaq up more than 37%.
Macy’s jumped 19.8% following reports that an investor group is launching a bid to take the storied retailer private for $5.8 billion.
Wall Street’s big focus this week will be updates on inflation at the consumer and wholesale levels, along with the Fed’s latest update on its interest rate policy.
On Tuesday, the government will release its November report on consumer inflation. Analysts expect the report to show that inflation continued slowing to 3.1% from 3.2% in October. On Wednesday, the government will release its November report on inflation at the wholesale level, which is also expected to show that the rate of inflation is easing.
The inflation data comes ahead of the Fed’s latest statement on interest rates Wednesday afternoon. The central bank is expected to hold its benchmark rate steady for a third consecutive time after spending much of 2022 and a large portion of 2023 aggressively raising rates to their highest levels in two decades.
Wall Street is overwhelmingly betting that the Fed will keep its benchmark interest rate at a range of 5.25% to 5.50% into early 2024 and could start cutting rates by the middle of that year. Analysts are also becoming more comfortable with the possibility that the central bank can pull off a “soft landing” for its policy, which refers to interest rates easing under high interest rates without the economy slowing into a recession.
“With inflation coming down faster than expected, it now appears likely that the Fed will refrain from additional rate hikes,” said Brian Rose, senior U.S. economist at UBS, in a note to investors. “At the same time, inflation is still too high and the labor market is still too tight for the Fed to consider cutting rates soon.”
Strong consumer spending and a solid jobs market have provided a bulwark to the broader economy, where growth has slowed but has so far avoided stalling. The government’s jobs report on Friday showed that U.S. employers added more jobs last month than economists expected. Workers’ wages also rose more than expected, and the unemployment rate unexpectedly improved.
The latest round of corporate earnings is mostly behind Wall Street and proved to be surprisingly good. Companies in the S&P 500 reported earnings growth of just under 5% during the third quarter, according to FactSet. That follows three straight quarters of earnings contractions.
Several big companies will report their earnings this week and are among the few remaining to release their results. Software company Adobe will report on Wednesday and Olive Garden owner Darden Restaurants will release its results on Friday.
Treasury yields gained ground. The yield on the 10-year Treasury rose to 4.24% from 4.23% late Friday.
Crude oil prices were stable.
Markets in Asia closed mostly higher, while markets in Europe ended mixed.
