The Dow and the S&P 500 have risen ahead of inflation data as investors were hopeful that a slowdown in price increases could support a sooner than expected end to the Federal Reserve’s policy of rapid monetary tightening.
The latest data, due on Wednesday, is expected to show consumer prices cooled on an annual basis in June, which could influence bets on another rate hike after the July meeting.
Investors have already raised their expectations of a 25 basis-point rate hike later this month after last week’s jobs report pointed to a resilient US economy.
In the previous session, the main US stock indexes closed a choppy session slightly higher after Fed officials signalled the central bank was nearing the end of its monetary tightening cycle.
“Investors are spending a lot of time thinking about the CPI data,” Peter Andersen, founder of Andersen Capital Management, said.
“They’re hoping that those numbers will be a little cooled, which might signal to the Fed that rate hikes are working and that there may be an earlier end to future rate hikes.”
New York Fed President John Williams in an interview with the Financial Times said the US central bank is not done raising rates.
He added that the economy is yet to feel the full impact of past rate hikes.
Weighing on the tech-heavy Nasdaq, megacap growth stocks such as Apple and Alphabet slipped 0.3 per cent and 0.1 per cent, extending Monday’s losses as Nasdaq Inc said it would rebalance its Nasdaq 100 index to address the benchmark’s “over-concentration”.
“The impact (of the rebalance) may be modest,” said Art Hogan, chief market strategist at B Riley Wealth.
“The big-cap Nasdaq index is going to adjust weightings vs a full addition or deletion. Also, far more money tracks the S&P 500, which is why S&P 500 component changes get a lot more attention than Nasdaq 100 moves.”
Amazon.com outpaced megacap peers, up 1.5 per cent, going into the “Prime Day” 48-hour shopping event, which falls on July 11-12.
In early trading, the Dow Jones Industrial Average was up 125.25 points, or 0.37 per cent, at 34,069.65, the S&P 500 was up 5.68 points, or 0.13 per cent, at 4,415.21, and the Nasdaq Composite was down 8.45 points, or 0.06 per cent, at 13,677.04.
Nine of the top 11 S&P 500 sectors advanced in early trading, with energy and materials leading gains by 0.6 per cent each on the back of gains in commodity prices.
Leading gains on the Dow, Salesforce advanced 3.1 per cent after the cloud services firm said it would increase prices of some of its cloud and marketing tools, a first in seven years.
Most big banks also rose, with JPMorgan Chase climbing 0.6 per cent after Jefferies upgraded the stock to “buy” ahead of quarterly results later this week.
Wall Street banks are expected to report higher profits for the second quarter as rising interest payments offset a downturn in deal-making.
Advancing issues outnumbered decliners by a 2.83-to-1 ratio on the NYSE and a 1.35-to-1 ratio on the Nasdaq.
The S&P index recorded 29 new 52-week highs and one new low while the Nasdaq recorded 43 new highs and 12 new lows.