Wall Street maintains gains before earnings, jobs data.

Wall ⁢Street and Global Stocks Edge Up as Traders Look Ahead to ⁢Earnings and Employment Report

By Lawrence Delevingne

(Reuters) – Wall Street and global stocks ⁤edged up on Monday while oil prices gained and the ⁣dollar was little ⁤changed, as traders looked ⁤ahead to corporate earnings and a key employment report due this week.

The Dow ⁢Jones ⁤Industrial Average rose 0.28% to 35,560.19, the S&P 500‍ gained 0.15% to 4,589.15 and the Nasdaq Composite added 0.21% to 14,346.02.

Apple Inc and Amazon.com both report on Thursday, while other well-known names ‍with results due include Caterpillar Inc, Starbucks Corp and Advanced Micro Devices. ⁣

European shares gained modestly after euro zone inflation fell​ further in July seeing that most measures of underlying price growth also eased. Markets took this as a comforting sign for the European Central Bank (ECB) as it ‌considers ending a brutal string of interest rate hikes.

The pan-European STOXX 600 index ⁣rose‍ by 0.12%, a second consecutive​ monthly gain. MSCI’s gauge‌ of‌ stocks across the globe gained 0.15%.

The modest gains came despite China’s manufacturing activity falling for a fourth straight month in July, as demand remained weak at home and abroad, official⁣ surveys showed on Monday.

“Markets are treating information with a lot more ⁢sensitivity and people⁤ are ⁢looking into new information with a detailed⁢ eye,” said Florian Ielpo, head of macro at Lombard Odier⁤ Investment Managers.

Eyes on the Horizon

Economic indicators that investors will ⁤be watching this week include the‍ U.S. ISM surveys on manufacturing and ⁣services, as well as the July payrolls report.

“Data ⁤out this week should remain superficially consistent with the ‘soft⁢ landing’ narrative,” Citi market strategists wrote in a note.​ “But the potential return to upside surprises to job growth would raise questions about whether slowing inflation can coexist⁣ with ‌tight labor markets.”

All three main U.S. indexes have posted recent gains as signs of cooling inflation and a resilient economy⁤ have eased investor sentiment about the economy surviving amid higher rates for longer.

Upbeat quarterly earnings from megacap growth companies including Alphabet and Meta Platforms as well as chipmakers Intel ​and Lam Research ‍have also⁣ boosted investor sentiment.

Almost 30% of the S&P 500 reports results this week. The index is now up nearly 20% for the year.

Paul Christopher, ‍Wells Fargo ‌Investment Institute’s ⁢head‌ of global investment strategy, urged caution given the potential for a weaker economy, slower disinflation and narrower corporate ‍profits.

“This year’s impressive equity rally has been driven by strong ⁢sentiment, without either the earnings growth or the directional improvement in economic data‌ to justify current market multiples and valuations,”​ Christopher wrote​ in a note.

Rising Rates

Chicago Federal Reserve Bank President Austan Goolsbee on Monday said the U.S. central bank is “walking the line pretty well” ‍on bringing inflation down without causing a recession, and will watch the data as September approaches to judge‍ if more monetary tightening may be appropriate.

The Bank ‍of England​ is widely expected to raise rates by at least a ⁢quarter point. Traders cut bets on a continuing rally in ​the pound by the⁢ most since mid-June ahead of⁤ the Bank of⁢ England rate decision on Thursday.

Sterling has surged 24% from a record low of $1.033 against the dollar in September after a disastrous budget, hitting a 15-month high of $1.314 in mid-July.

The dollar edged higher on Monday⁢ after⁣ a survey from the Federal Reserve showed U.S. banks reported tighter credit standards⁣ and weaker⁤ loan demand during‌ the second quarter, a sign rising interest rates are having an impact on the economy.

The Japanese yen weakened about ​0.8% versus the dollar. Investors continued to digest​ Friday’s decision ‌by the Bank of Japan​ (BOJ) to lift the lid on bond⁢ yields in a step away from its⁣ ultra-easy policies. ⁤

Japanese 10-year yields surged to a nine-year high ⁤up to 0.6% on Monday, and toward the new cap of‌ 1.0%.

U.S. Treasury yields were marginally lower, with investors waiting for employment data to assess the impact of⁤ the Fed’s monetary tightening campaign on the economy. The 10-year was down 1⁣ basis⁣ point at 3.961%.

In⁢ commodities, gold prices rose, putting them on track for⁣ their best month ‍in four, helped by a weaker dollar and expectations that major global central banks are nearing a peak with ⁤interest rate hikes. Spot gold added‌ 0.3% to $1,965 an ounce [GOL/]

Oil prices ‍rallied ⁣to ⁣a fresh three-month high and recorded ⁤their steepest monthly gains since January 2022, supported by ​signs of tightening‌ global supply and rising demand through the rest of this ‍year.

U.S. crude⁤ rose 1.63% to $81.89 per barrel and Brent was‍ at $85.56, up 0.67% on the day.

(Reporting by Lawrence⁤ Delevingne in ‌Boston and Nell Mackenzie in London; Editing by Nick Macfie, Will Dunham and Deepa Babington)

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