THE GIST (“THE WHAT”)
The S&P 500 index snapped a four-day losing streak following optimistic economic data and strong earnings. Gains, however, were capped as yields rose midsession following hawkish comments by Fed Governor Bowman and NY Fed President Williams. The index closed the session with a modest gain of 40.41 points (0.90%) at 4518.44.
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THE DETAILS (The “How & Why”):
In today’s economic news, Jun consumer credit jumped 17.848 billion, stronger than expectations of 13 billion. Fed Governor Bowman and NY Fed President Williams reiterated the need to keep Fed policy restrictive to get the inflation on a path down to the 2% target rate. Yields moved higher following these hawkish comments. The 10-year Treasury yield rose 4.4 basis points to settle at 4.078%.
Following last week’s employment data that re-ignited worries that the Fed might keep rates higher for longer, investors are looking forward to CPI and PPI data this week for clues about future monetary rate policy and how close the Fed is to end its aggressive rate hikes.
Lifting the broader market were some solid second quarterly earnings. Monster Beverage Corp soared 6.13% to lead the gainers within the index, rebounding from last week’s drop on reporting weaker-than-expected revenues and earnings. The energy-drink giant clawed back its losses after Piper Sandler raised its price target on its stock citing strong innovation pipeline in energy drinks and alcohol category.
Booking Holdings and Expedia Group were other strong gainers on the back of stock price upgrades, both jumping more than 4%. Berkshire Hathaway hit its all-time highs, rising 3.4% after the Warren Buffet led conglomerate reported its highest ever quarterly operating profit of $10.04 billion and a cash holding of close to $150 billion.
On the bearish side, Moderna Inc slipped 6.46% to lead the losers within the broader index to close at its lowest level since 2020. The biotech firm extended loses for the sixth consecutive session after reporting losses due to falling Covid vaccine sales. Tyson Foods and Enphase Energy Inc were the other major decliners of the session, both falling more than 3% following disappointing second quarter earnings.