Wall Street closes at fresh 2023 highs as inflation data, Fed eyed
Federal Reserve's policy announcement, which will strongly influence investor expectations on the path of interest rates.
Market watchers increasingly believe the central bank is done with its interest rate hike cycle and could potentially cut rates in the first half of next year. These expectations have helped fuel a rally in equities in recent weeks that sent each of the three major indexes to their highest closing levels of the year.
While markets had been pricing in a better than 50 percent chance of a rate cut in March by the Fed last week, data on Friday showed job growth accelerated and the unemployment rate dipped, while a separate report showed consumer inflation expectations had dropped.
The data raised hopes the inflation could continue to decelerate without the economy falling into a recession and expectations for a March cut softened.
Investors will eye the Consumer Price Index (CPI) data due on Tuesday, which is expected to show headline inflation remaining unchanged in November, followed by the Producer Price Index (PPI) and the last interest rate decision of the year from the Fed on Wednesday.
«I don't think there is any reason to react ahead of either of those three events, it's just in wait-and-see mode. The trend is just going to stay higher,» said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.
«Certainly if the CPI number comes in softer, if it's weaker than what the expectation is that will be quite bullish because it will just speak to the slowing inflation, Goldilocks kind of landing story.»
The Dow Jones Industrial Average rose 157.06 points, or 0.43%, to 36,404.93, the S&P 500 gained 18.07 points, or 0.39 %, to 4,622.44 and the Nasdaq Composite gained 28.51
