The stock market rallied on Monday to start a big week of earnings as the latest quarterly results from big banks gave further clues about the health of the economy, with investors now expecting the Federal Reserve to be less aggressive about hiking rates at its upcoming policy meeting.
A number of big companies are about to report their quarterly earnings.
The market jumped to start the week, with the S&P 500 gaining 0.9% and the Dow Jones Industrial Average rising 1%.
Goldman's stock gained 4% after the firm exceeded revenue and profit expectations thanks to higher bond trading activity, but overall profits fell more than 50% from last year.
Despite warnings of a weakened capital markets environment, Bank of America's stock rose 3% despite the fact that the company topped revenue expectations.
S&P 500 companies are still expected to post increases in second-quarter profits and revenue despite recession fears.
Most experts now predict a 75 basis point rate hike, rather than the 100 basis point hike that some had predicted.
According to the Wall Street Journal, the central bank will raise interest rates by 75 basis points for the second meeting in a row.
In order for stocks to find a sustainable floor and rally, both inflation and policy tightening will need to change. He predicts that the Fed will go in a more dovish direction by September as core inflation is cooling and headline prices are set for a big hit.
The recent rally in oil prices continued on Monday. The weaker dollar and tight global supply helped drive prices higher, offsetting investor concerns about demand taking a hit from a recession or additional Covids in China. The price of the US benchmark West Texas Intermediate is around $101 per barrel, while the international benchmark is around $105 per barrel.
A number of big companies report earnings this week, including the likes of Johnson & Johnson, United Airlines, and Facebook.
Strong retail sales and mixed bank earnings led to a 600 point jump in the DOW.
The index fell after the inflation report added to fears of a recession.
Wall Street Firms Slash S&P 500 Price Targets.
Analysts predict that oil prices will rebound later in the year.
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