NEW YORK, Sept 12 — Energy and technology shares helped drive US stocks to their highest in more than two weeks today ahead of a crucial inflation reading this week that could determine the pace of interest rate hikes by the Federal Reserve.
All of the S&P 500 sectoral indexes were up in early trading, led by a 2 per cent jump in energy shares. Oil prices rose as supply concerns mounted amidst uncertainty over Iranian nuclear talks.
Heavyweight Amazon.com, Tesla Inc and Apple Inc added between 1.2 per cent and 2.1 per cent, providing the biggest boost to S&P 500 and the Nasdaq.
The three major US stock indexes rallied sharply last week, as investors took advantage of a sharp drop in stock prices since mid-August that was triggered by concerns over soaring inflation and the impact of tighter monetary policy to curb it.
All eyes are on consumer prices data on Tuesday for any signs that price pressures may be easing. Headline inflation is expected to rise at an 8.1 per cent pace over the year in August, compared with 8.5 per cent in July.
Core CPI, which strips out volatile factors such as energy and food, is expected to increase to 6.1 per cent from 5.9 per cent in the previous month. A recent retreat in commodity prices, especially oil, has boosted hopes that the worst of price pressures is over.
A soft number might revive speculation the Fed will only hike by 50 basis points this month, though it would likely have to be very weak to have a real impact on the hawkish stance taken by most policymakers recently.
Money markets are pricing in an 89 per cent chance of a third straight 75 basis point increase by the US central bank on September 21.
“Investors expect the CPI data to show a continued decline in inflationary reading, which would be encouraging to investors, since the FOMC meeting occurs only a week later,” said Sam Stovall, chief investment strategist at CFRA Research in New York.
“Our economists are expecting a 50-basis-point hike at the September meeting though I think the chances of a 75-bps hike are equally possible.”
At 9.51am ET, the Dow Jones Industrial Average was up 216.93 points, or 0.67 per cent, at 32,368.64, the S&P 500 was up 34.33 points, or 0.84 per cent, at 4,101.69, and the Nasdaq Composite was up 100.13 points, or 0.83 per cent, at 12,212.44, their highest levels since August 26.
Also aiding sentiment, Ukrainian forces swept further across territory seized from fleeing Russian troops on Monday, as Moscow grappled with the consequences of the collapse of its occupation force in northeastern Ukraine.
“With Ukraine now putting Russia on the defence and taking over many of the territory that had been lost, that is encouraging to global investors because it implies that maybe some ceasefire will occur more quickly than earlier anticipated,” Stovall added.
Bristol-Myers Squibb Co gained 6.2 per cent after the US Food and Drug Administration approved the company’s oral treatment for adults with plaque psoriasis.
Shares of Amgen, which makes psoriasis drug Otezla, fell 3.4 per cent.
Carvana Co jumped 11.7 per cent as Piper Sandler upgraded the online used-car seller’s stock to “overweight” from “neutral”, saying it is grossly undervalued.
Twitter Inc slipped 1 per cent after the social media company said it did not breach any agreement for paying a whistleblower and that Elon Musk’s attempt to terminate his US$44 billion (RM197 billion) deal was invalid.
Advancing issues outnumbered decliners by a 5.21-to-1 ratio on the NYSE and by a 2.11-to-1 ratio on the Nasdaq.
The S&P index recorded three new 52-week highs and no new lows, while the Nasdaq recorded 19 new highs and 18 new lows. — Reuters