Stocks rose on Monday as investors expected a packed week midterm legislative elections and key inflation data on deck for the next few days, and ignored a supply warning from Apple.
The Dow Jones Industrial Average traded up 423.78 points, or 1.31%, at 32,827.00. The S&P 500 gained 0.96% to 3,806.80. The Nasdaq Composite rose 0.85% to 10,564.52, after trading between gains and losses earlier in the session. All three major averages posted a second positive day in a row.
Apple shares gained about 0.4%, despite falling more than 1% earlier in the session, after the tech company said iPhone production has been temporarily reduced due to Covid-19 restrictions in China. Meanwhile, Palantir shares fell almost 11.5% after the company posted disappointing quarterly results. Carvana fell 15.6%..
Facebook’s father Goal gained 6.5% after a Wall Street Journal report that said The company could start layoffs as soon as Wednesday.
Key elections and economic reports ahead
Tuesday’s midterm elections will determine which party controls Congress and affect the direction of future spending. Democrats currently control the House and have a majority in the Senate.
Investors could approve of a potential gridlock that could stem from the midterm elections, as a Democratic president, with a Republican or divided Congress, has historically meant above-average earnings, according to RBC’s Lori Calvasina in a Monday note. .
“The market is hopeful that some kind of Republican victory in Congress will lead to some sort of gridlock in Washington, which they see as good, or at least no new spending, which would be good for rates and Treasury supply.” Brad said. Conger, deputy CIO of Hirtle Callaghan & Co.
On the economic front, investors are anticipating that Thursday’s consumer price index report will provide further insight into how far the Federal Reserve must go to reduce inflation. A hot report could signal to investors that a turnaround from a prolonged period of higher interest rates may not be imminent.
“[In] For stock and bond markets to match the post-peak inflation performance indicated in the table, inflation must continue to decline, and at a faster pace than we have seen so far. Until the Fed indicates the ‘pivot’ is near, things could remain challenging,” Baird’s Ross Mayfield wrote in a recent note.
Elsewhere, multiple companies are expected to report, including on Monday. Activision Blizzard, lyft Y Interactive Take-Two. Corporate earnings season is drawing to a close and most companies in the S&P 500 have reported results.
