Stocks rallied throughout October as investors turned their attention to the latest round of corporate earnings. More than half of the companies in the S&P 500 reported results and posted a combined 2.3 percent rise in earnings, according to FactSet.
The companies have so far given investors mixed results and forecasts as Wall Street tries to get a more complete picture of the economy. Inflation remains high, and the Federal Reserve is aggressively raising interest rates to try to slow the economy and curb high prices. The strategy risks slowing economic growth too much and sending the economy into recession.
Bond yields are hovering near multi-year highs as the Fed continues to raise interest rates. The yield on the two-year Treasury, which typically tracks expectations of Fed action, rose to 4.47 percent from 4.42 percent late Friday.
The yield on the 10-year note, which influences interest rates on mortgages and many other loans, rose to 4.04 percent from 4.02 percent late Friday.
Investors will be on the lookout for another extremely large interest rate hike from the Fed this week. It is widely expected to push through another hike next week, triple the usual size. According to CME Group, Wall Street was roughly split on whether it would do the same in December or shift to less growth.
Inflation has been a global problem, with the European Union’s statistics agency Eurostat reporting on Monday that inflation has hit another record in the 19 countries that use the euro currency, driven by out-of-control natural gas and electricity prices due to Russia’s war in Ukraine. According to Eurostat, annual inflation reached 10.7 percent in October.
Investors will be closely watching the latest monthly U.S. government jobs report on Friday to see if the hot jobs market is cooling as inflation weighs on business. There are still plenty of big-cap gains on Wall Street this week. Pfizer will report its results on Tuesday, followed by CVS on Wednesday. Starbucks reports results on Thursday.
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