US stocks fell early Monday morning after the People’s Bank of China cut its one-year lending rate to 2.75% from 2.85% and injected an additional 400 billion yuan ($60 billion) in loan markets after government data showed July factory output and retail sales weakened.
US stocks rose on Friday and major indexes posted gains for the week as investors cheered signs of slowing inflation.
The S&P 500 and Nasdaq Composite posted their fourth consecutive week of gains. That marked the longest stretch since a streak that ended in early November, when both rose for five straight weeks.
Investors hope that a recent slowdown in consumer price growth will encourage the Federal Reserve to raise interest rates at a slower pace, which in turn could prevent the economy from slipping into recession.
Lower rates tend to boost prices for stocks, bonds and more speculative assets like cryptocurrencies, and stocks have swooned this year in part because of the Fed’s aggressive rate hikes.
While inflation is still near its highest in decades, data on Wednesday showed it had eased, reaching 8.5% in July compared with 9.1% in June .
Data on Thursday showed US suppliers raised prices in July at the slowest annual pace since last fall, boosted by falling energy prices.
On Friday, the S&P 500 rose 72.88 points, or 1.7%, to 4,280.15. The Nasdaq Composite rose 267.27 points, or 2.1%, to 13,047.19. The Dow Jones Industrial Average rose 424.38 points, or 1.3%, to 33,761.05. The Dow rose 2.9% for the week. The Nasdaq and S&P 500 rose more than 3% for the week.
Investors will pay close attention to second-quarter earnings reports from retailers Walmart, Target, Lowe’s, TJ Maxx and Ross, as well as the health of the U.S. consumer, providing some clarity on the impact of inflation on company profits.
Markets will also focus on management guidance to confirm recent data showing inflation has peaked.
Also, the New York Federal Reserve will kick off this week’s economic reports at 8:30 a.m. ET on Monday with a closely watched gauge of regional manufacturing activity.
The Empire State Manufacturing Survey is expected to decline to 5.5 in August, from a stronger-than-expected reading of 11.12 the previous month when it broke out of contraction territory (a number above zero means more New York area manufacturers say business conditions are improving). rather than getting worse).
There will also be several housing-related reports to be released this week.
At 10 a.m. ET, the National Association of Home Builders will release its housing market index for August. The homebuilder sentiment gauge is expected to hold steady at 55, the lowest since May 2020, after falling much more than expected to that level last month after high inflation and mortgage rates hurt home sales and buyer traffic. It would be a sign that barely more than half of NAHB members consider business conditions good.
Other reports to watch this week are home starts and building permits on Tuesday, and existing home sales on Thursday, both for the month of July.
Meanwhile, stocks were mixed in Asia after China cut a key interest rate and Japan reported its economy expanded at a faster pace in the latest quarter.
Tokyo and Sydney advanced while Hong Kong and Shanghai fell.
Tokyo’s Nikkei 225 rose 1.1% to 28,871.78 and Sydney’s S&P/ASX 200 rose 0.4% to 7,062.50. T
the Shanghai Composite Index fell 0.1% to 3,275.34, while Hong Kong’s Hang Seng Index fell 0.4% to 20,092.37.
Markets in South Korea were closed for a holiday.
Bangkok’s SET index rose 0.4 percent after the Thai government reported the economy expanded at a quarterly pace of 0.7 percent in April-June, slowing from 1.1 % of growth in the first quarter of the year.
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