U.S. stocks rose on Monday as investors braced for another week of events likely to influence the market: November 8 mid-term elections and October consumer prices.
The S&P 500 (^GSPC) rose 1%, while the Dow Jones Industrial Average (^ DJI) jumped more than 400 points, or about 1.3%. The technology-intensive Nasdaq composite (^IXIC) gained about 0.9% after the index posted its worst weekly decline since January.
A batch of downbeat corporate news has renewed focus on the wreckage of tech stocks after disappointing results last week, the industry’s biggest hitters have been dragged in – Apple (AAPL), Amazon.com (AMZN) and Alphabet (GOOGL) — at losses of more than 10% each.
Apple (AAPL) reversed a loss of more than 1% to close higher after the company said in a statement on Sunday that it expects fewer shipments of its new premium iPhones than expected beforeciting COVID lockdowns in China that have hampered factory operations at its biggest smartphone maker Foxconn.
Also among the tech giants, Facebook’s parent Meta (META), which is now the worst performer in the S&P 500 index this year, is expected to begin large-scale layoffs this week, according to a Wall Street Journal report on Sunday. The shares rose 6.5%.
Elsewhere in the markets, Carvana (CVNA) shares sank almost 16% after a Morgan Stanley analyst said last week that the car dealership could be worth as little as $1.
election day can keep investors in suspense as dozens of key races determine which political party controls the congressional agenda. Wall Street has always preferred a divided Congress or White House, with traffic jams making it difficult to enforce any potentially adverse legislation.
“Dating back to 1929 and excluding the Great Depression, some of the S&P 500’s best annual returns have been seen when the sitting president doesn’t have full control of both sides of Congress,” said Megan Horneman, CIO of Verdence Capital Advisors, and Leo Kelly, CEO. said in an emailed comment. “That may be because markets don’t expect major changes in the law with a divided Congress.”
While political campaigns have thrust fiscal leadership into the spotlight, some strategists say medium-term outcomes rarely influence financial markets outside of short-term volatility.
“Markets are driven more by expected financial conditions and economic catalysts than by the midterm elections,” said Dave Sekera, Morningstar’s chief U.S. market strategist. recent note. “Historically, some analysis has shown that stock markets have tended to underperform as they approach the mid-points and then outperform thereafter.”
The consumer price index (CPI) for October published on Thursday, however, should influence the stock markets. Another hot inflation reading may solidify expectations that the Federal Reserve will raise its key rate more than initially expected.
Economists polled by Bloomberg see the headline CPI at an annual rate of 7.9% for the month, a moderation from September’s 8.2% year-on-year increase. The core CPI, which excludes the volatile food and energy components from the measure, is expected to come in at 6.5%, little change from 6.6% last month.
“Headline inflation has probably peaked, but core inflation only peaked post-pandemic last month,” Baird’s investment strategy analyst Ross Mayfield said in a statement. note sent by e-mail. “While the Fed has hinted that it sees reason to slow its pace, the rate of inflation – even though it has peaked – remains far too high to be comfortable.”
“Until the Fed signals that the ‘pivot’ is near, things could remain difficult,” he added.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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