On Monday, US stocks surged ahead of Tuesday's consumer price index (CPI) report, which is expected to show a further slowdown in inflation. The Wall Street consensus is that January inflation will come in at an annual pace of 6.2%, down from 6.5% in December and June's high of 9.1%. The Labor Department will publish the data at 8:30 a.m. ET.
Analysts at JPMorgan said a reading of 6% to 6.3% is the most likely scenario, with odds of 65%. Should that happen, the S&P 500 is forecasted to see a gain of between 1.5% and 2%.
Investors remain optimistic that improving data will help the Federal Reserve start cutting rates later this year. However, Fed policymakers have expressed concern that the central bank still has a lot of work to do on inflation and warned that benchmark rates may eventually have to be lifted higher than markets expect.
At the closing bell on Monday, US indexes rose 1.1% for the S&P 500 and the Dow Jones Industrial Average, and 1.5% for the Nasdaq Composite. Other market news included traders losing $7.6 billion betting against Tesla stock, the two-year Treasury yield being the best indicator for where the stock market is going in 2023 according to Mohamed El-Erian, Warren Buffett's little-known stock portfolio worth nearly $6 billion, and Russia struggling to find buyers for its crude oil supply due to sanctions.
In commodities, bonds and crypto, oil prices rose, gold dipped 0.64% to $1,862.50 per ounce, 10-year yield slipped 2.4 basis points to 3.719%, and Bitcoin dropped 1.81% to $21,583.89.