Investing.com — U.S. stocks made small moves on either side of the flatline on Monday, after Wall Street posted its best week since mid-April. Investors parsed rising oil prices amid waning hopes for a breakthrough in the Middle East and prepared for key inflation data later in the week.
At 11:04 ET (15:04 GMT), the benchmark S&P 500 index was up 0.1% to 7,762.28 points, the tech-heavy slipped 0.2% to 26,650.97 points, and the blue-chip shed 0.1% to 53,999.86 points. Get premium stock market insights with analyst comments on InvestingPro – now 55% off
Stocks are coming off their best week in over three months, helped by a slide in oil prices, a strong earnings season, and a rebound in semiconductor names. The advance helped Wall Street return to record levels for the first time since early June.
A softer-than-expected jobs report on Friday also helped, as the data prompted traders to pare their expectations for Federal Reserve interest rate hikes. The U.S. economy unexpectedly shed 23,000 jobs in July, while readings for the preceding two months were also revised sharply lower.
U.S. government bond yields, which tend to move inversely to prices, retreated, echoing a decrease in near-term interest-rate hike wagers in the wake of the data.
Attention is now turning to Wednesday, when a closely-watched reading of U.S. inflation will be released and, potentially, offer further insight into how the Fed could approach rate decisions in the months ahead.
The Labor Department’s consumer price index is seen cooling marginally to 3.4% from 3.5% in the twelve months to July. The headline gauge includes gasoline expenses, which have been elevated since the start of the Iran war in late February, fueling worries over a wave of energy-driven inflation pressures.
Stripping out energy and food costs, the so-called “core” CPI index is tipped to ease to 2.5% from 2.6%.
At those levels, inflation would remain well above the Fed’s target, analysts flagged. While the central bank could opt to raise rates to attempt to quell price gains, doing so could imperil the wider economy, especially a labor market that now seems to be shaky.
Iran issues fresh demands
Iran and the U.S. seemed to be at loggerheads once again on Monday, with Tehran issuing tough demands to reopen the Strait of Hormuz and President Donald Trump arguing that Washington’s economic pressure will bring eventually the Iranians to the negotiating table.
The Iranian council, a group dominated by some of the country’s most hardline leaders, is said to be reviewing a draft deal with Oman to gradually reopen the strait and create new shipping lanes through the conduit, the Wall Street Journal reported. Similar reports last week, along with assertions from U.S. officials, helped to fuel anticipation for an imminent deal — although that optimism appears to have now been all but dashed.
On Sunday, Iran’s Foreign Minister Abbas Araghchi claimed that no direct talks with the U.S. were ongoing, but said negotiations with Oman are continuing.
Trump, meanwhile, said that Washington is only “semi-negotiating” with Tehran and is opting to allow economic pressure to accumulate on the country. He argued that Iran’s economy is in “very bad shape,” Axios reported.
“[T]he tenor of headlines out of the Middle East sounded negative as the Iran-Oman Hormuz deal still hasn’t been formally announced while Tehran outlined a series of […] demands to Washington,” analysts at Vital Knowledge said in a note.
On the earnings front, semiconductor gear maker and networking equipment provider are set to highlight the slate of reports this week. Some 436 of the S&P 500 companies have released their latest results, with 85.1% of those beating estimates, according to LSEG data cited by Reuters.
The solid earnings season could soothe lingering fears over the sustainability of the artificial intelligence boom and a wave of inflation triggered by the Iran war.
(Ayushman Ojha and Anuron Mitra contributed reporting)