Stocks Grind Higher as Dollar Halts Hot Streak: Markets Wrap

Stocks kicked off the week with gains as traders awaited economic readings that will help shape Wall Street’s views on how close the Federal Reserve is from wrapping up its tightening cycle. Bonds were relatively stable. The dollar fell.

(Bloomberg) — Stocks kicked off the week with gains as traders awaited economic readings that will help shape Wall Street’s views on how close the Federal Reserve is from wrapping up its tightening cycle. Bonds were relatively stable. The dollar fell.

The S&P 500 hovered near its 4,500 mark. Tesla Inc. rallied as Morgan Stanley upgraded the company, saying its Dojo supercomputer may boost market value by as much as $500 billion. Qualcomm Inc. climbed after Apple Inc. extended a deal with the chipmaker. Traders also geared up for the iPhone maker’s new product unveiling on Tuesday. Charter Communications Inc. and Walt Disney Co. rose on a news report they reached an agreement ending a blackout of ESPN for millions of pay-TV customers. Nvidia Corp. sank. J.M. Smucker Co. slumped after agreeing to acquire Twinkies maker Hostess Brands Inc. for about $5.6 billion.

US consumers’ inflation expectations were mostly stable in August, but households grew more concerned about their finances and more pessimistic about the job market, according to a Fed Bank of New York survey. The monthly consumer-price index report on Wednesday will provide the latest insight into how much further the central bank may need to go to pull inflation back toward its target. 

Read: ‘Hold-Your-Breath Moment’ Puts Wall Street on Edge: Surveillance

With the economy defying gloomy forecasts and energy prices rising, economists are forecasting the biggest monthly jump in 14 months — and the swaps market is pricing in risk that it will come in even higher than expected.

“This week is more likely to be a ‘good news is good, bad news is bad’ story,” said Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley. “The market’s ability to rebound in the near term could hinge on this week’s inflation numbers, especially Wednesday’s CPI. If it comes in hotter than expected, it could fuel worries that the Fed may turn even more hawkish and raise rates again.”

The US economy is headed for a period of moderate growth, avoiding a recession over the coming 12 months — which would support the stock market, according to Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management. 

“However, uncertainty is likely to keep broad equity markets choppy and rangebound,” she noted.

The greenback retreated after a record hot streak as Asia’s biggest central banks took aim in different ways at its recent rally. The People’s Bank of China gave a strong warning to speculators to steer clear of destabilizing the yuan, while the head of the Bank of Japan took a more subtle approach in hinting at the possibility of an eventual policy shift, in an interview which sent the yen up about 1%.

Read: More Treasury Strategists Ditch Bullish Calls: Research Roundup

Investors should focus on a “late-cycle portfolio” of defensive stocks, industrials and energy, according to Morgan Stanley strategists led by Michael Wilson.

The market is in a late-cycle backdrop — a time when the Fed is expected to pause or reverse its hawkish policy stance — and more conservative equity factors, like high cash and low debt, have started to outperform, Wilson wrote in a note on Monday. He reiterated his view that stock markets are not yet reflecting the risk of a recession.

T-Mobile US Inc. is tapping the US investment-grade bond market on Monday as blue-chip firms rush to raise fresh capital ahead of key inflation data later this week.

Companies storming the bond market at a neck-breaking pace made one thing clear: They don’t expect rates to stay elevated for long.

More than $110 billion in bonds were sold globally last week — the busiest start to September on record — with issuance heavily skewed to debt due in under 10 years. The barrage was led by investment-grade issuers, teeing up a wave of junk, including billions of dollars in buyout funding.

Traders also kept an eye on any news regarding negotiations between the United Auto Workers union and automakers, with the Biden administration expecting a deal and deploying top officials to help facilitate the talks, according to Deputy Treasury Secretary Wally Adeyemo.

The UAW has threatened a strike against General Motors Co., Ford Motor Co. and Stellantis NV beginning Thursday if no agreement is reached on a new pay deal. 

Elsewhere, China’s credit demand improved, deflationary pressures eased and the yuan rallied, adding to a recent trickle of signs that the economy and financial markets may be stabilizing after a sharp downturn.

Corporate Highlights

  • RTX Corp.’s plan to address the latest flaw in its marquee commercial jet engine will ground hundreds of Airbus SE A320neo aircraft over the next three years, a fresh source of disruption to global airlines’ post-pandemic recovery.
    • The company cut its full-year sales outlook and will take a roughly $3 billion charge in the third quarter tied to the plan to address the flawed parts.
  • Instacart and its backers set the stage for an initial public offering that may value the grocery-delivery business at up to $9.3 billion, less than a quarter of what it was worth at the height of the Covid-19 pandemic. The company and its backers are seeking to raise as much as $616 million.
  • Arm Holdings Ltd. is considering raising the price range of its initial public offering after meeting investors for what would be the world’s largest listing this year, according to people familiar with the matter.
  • Marketing and data automation provider Klaviyo Inc. has attracted cornerstone investors including BlackRock Inc. for a US initial public offering that’s set to raise as much as $518 million.
  • JetBlue Airways Corp. agreed to transfer some Spirit Airlines Inc. gates and flight slots at three airports to help lessen antitrust concerns over its pending acquisition of the low-cost carrier.
  • Lockheed Martin Corp. may see more than $800 million in payments withheld through next June until it wins approval for the software powering its most advanced version of the F-35, according to newly disclosed delivery figures.
  • Nikola Corp. said late Friday that one of its battery-electric big rigs experienced a “thermal incident” during a test on the cause of recent fires that prompted a recall.

Key events this week:

  • Germany ZEW survey expectations, Tuesday
  • UK jobless claims, unemployment, Tuesday
  • Apple set to unveil iPhone 15 line and next-generation smartwatches at “Wonderlust,” its biggest product-upgrade event of the year, Tuesday
  • Japan PPI, Wednesday
  • Eurozone industrial production, Wednesday
  • UK industrial production, Wednesday
  • US CPI, Wednesday
  • Tech leaders including Tesla’s Elon Musk and Meta Platforms’ Mark Zuckerberg are set to attend a forum on the future of AI convened by Senator Chuck Schumer, Wednesday
  • Japan industrial production, Thursday
  • European Central Bank policy meeting and news conference by President Christine Lagarde, Thursday
  • US retail sales, PPI, business inventories, initial jobless claims, Thursday
  • China property prices, retail sales, industrial production, Friday
  • US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday

Some of the main moves in markets:


  • The S&P 500 rose 0.4% as of 11:37 a.m. New York time
  • The Nasdaq 100 rose 0.6%
  • The Dow Jones Industrial Average rose 0.1%
  • The Stoxx Europe 600 rose 0.3%
  • The MSCI World index rose 0.5%


  • The Bloomberg Dollar Spot Index fell 0.6%
  • The euro rose 0.4% to $1.0746
  • The British pound rose 0.5% to $1.2529
  • The Japanese yen rose 1% to 146.39 per dollar


  • Bitcoin fell 2.7% to $25,114.13
  • Ether fell 3.6% to $1,560.28


  • The yield on 10-year Treasuries advanced two basis points to 4.28%
  • Germany’s 10-year yield advanced three basis points to 2.64%
  • Britain’s 10-year yield advanced four basis points to 4.47%


  • West Texas Intermediate crude fell 0.6% to $86.99 a barrel
  • Gold futures rose 0.2% to $1,946.90 an ounce

This story was produced with the assistance of Bloomberg Automation.

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