NEW YORK (AP) — Stocks rose in afternoon Wall Street trading on Monday as the campaign tapered ahead of the US midterm elections to determine which party controls Congress.
The S&P 500 was up 0.9% at 2:33 pm ET. The Dow Jones Industrial Average rose 439 points (1.4%) to 32,843 and the Nasdaq rose 0.9%.
Apple has seen little change following an earlier drop after warning customers they would have to wait longer to get the latest iPhones after virus restrictions were imposed on Chinese contractor factories. There was not. Facebook’s parent company, Facebook, rose 5% after The Wall Street Journal reported this week that it was planning a large number of job cuts.
Travel-related companies such as cruise companies fell. Norwegian Cruise Line, which reports results on Tuesday, fell 1.6%.
Bond yields rose. Yields on 10-year government bonds rose to 4.20% from 4.16% late Friday. Two-year US Treasury yields climbed to 4.73% from 4.66%.
Tuesday’s election will determine parliamentary control and the primary governor. History suggests the ruling party may suffer losses in the midterm elections, and decades of high inflation have become a significant problem for the Democratic Party. Markets typically favor different balances of power with few significant changes in policy.
Stubborn inflation and the Federal Reserve’s rate hike policy to counteract it remain major concerns for Wall Street. Investors will get an important update on inflation on Thursday when the US government releases his October consumer price report.
Price updates show where consumers are being squeezed by inflation. More importantly, it could give investors a better outlook on how the Fed will handle inflation going forward, said Keith Buchanan, portfolio manager at Globalt Investments.
“It boils down to one question,” he said. “What effect did the Fed’s tightening have on inflation?”
Wall Street expects consumer prices to rise 8% year-over-year in October, down slightly from September’s 8.2% rise.
The central bank has suggested it may slow down the pace of rate hikes as it assesses the impact of previous policies. The Fed also said it may eventually need to raise interest rates higher than previously expected if inflation continues.
Wall Street is evenly split between expectations of a half-percentage-point rise and a three-quarters-percentage-point rise at the central bank’s next meeting in December, according to CME Group. They are evenly split on whether they will finally raise interest rates to the 5% to 5.25% range next year or to the 5.25% to 5.50% range.
The policy has raised concerns that the Fed could slow the economy too much, triggering a recession.
“The delays are different from cycle to cycle and for different reasons. You never know when tightening will have the intended effect,” Buchanan said.
The latest round of corporate earnings has provided mixed financial results and has alerted businesses to the impact of inflation on operations and demand for goods and services. More than 85% of companies in the S&P 500 report their latest earnings, and overall growth is expected to plateau at around 2.7%, according to FactSet.
A cautious and weak forecast impacted Wall Street’s forecast for the rest of the year. Analysts have sharply lowered their earnings growth forecasts for the quarter, now forecasting a contraction of about 1.4%. They had forecast growth of over 8% in June.
Several big companies are due to report results this week, including Walt Disney on Tuesday.
Markets gained support in Asia amid continued speculation about a possible easing of China’s zero-COVID strategy, but there was no official confirmation of major changes in China.
The European market was mostly overpriced.
Yuri Kageyama and Matt Ott contributed to this report.
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