US stocks opened higher on Monday, continuing their momentum after opening the year with a rally last week.
Shortly after Monday’s opening bell, the S&P 500 (^GSPC) was up 0.6%, while the Dow Jones Industrial Average (^DJI) was up about 165 points, or 0.5%. The tech-heavy Nasdaq Composite (^IXIC) gained 1.1%.
While the US dollar continued its recent decline, oil prices rose for the week on optimism around demand as China reopened.
West Texas Intermediate (WTI) crude futures rose nearly 3% on Monday morning to trade just below $76 a barrel.
Retail stocks were also in focus early Monday, with several companies announcing news ahead of the key ICR Conference this week.
Lululemon ( LULU ) warned Monday morning that it expects fourth-quarter total revenue to decline as the company struggles with rising costs due to lower inflation-related consumer spending. Shares fell 10% in early trading.
On Thursday, Macy’s ( M ) also warned about sales growth, and shares fell as much as 4.4% on Monday. Abercrombie & Fitch ( ANF ) , by contrast, said its sales decline would be smaller than expected, sending its shares up about 2% on Monday morning.
Meanwhile, shares of Bed Bath & Beyond ( BBBY ) jumped as much as 18% in early trading — at one point surging 75% — after the stock lost nearly half its value last week after the embattled meme-stock seller said bankruptcy was on the table. Bed Bath & Beyond is set to report earnings on Tuesday.
Alibaba ( BABA ) shares rose nearly 4% in early Monday morning trading for a sixth straight day after co-founder Jack Ma agreed to give up controlling rights to its fintech affiliate Ant Group.
Investors await December’s Consumer Price Index (CPI) release on Thursday – the most important economic release of the month and the last major reading before Federal Reserve officials meet on Jan. 31-Feb. 1 to deliver the next percentage increase. Wall Street will also experience the first batch of earnings of the reporting season later in the week, coming from Wall Street’s megabanks.
All three major U.S. indexes rose on Friday as wage growth cooled in the latest monthly jobs report. The S&P 500, Dow and Nasdaq rose at least 2% in the previous session. For the week, the S&P 500 and Dow Jones Industrial Average each rose about 1.5%, while the tech-heavy Nasdaq Composite rose 1%.
Nonfarm payrolls rose by 223,000 in December as the unemployment rate fell to 3.5%. The figures show a persistent imbalance between labor supply and demand, but investors welcomed easing wage pressures as a sign the Fed may be reconsidering its ambitious rate hike path.
“Certainly, the labor market has been able to withstand longer-term interest rate increases better than many expected,” Mike Loewengart, head of model portfolio construction at Morgan Stanley’s Global Investment Office, said in emailed comments. “Remember, however, that monetary policy is acting on lag, so this is not a time for a hiring slowdown, but it is likely.”
“Fed minutes have made it clear that rates will remain high for all of 2023, so investors should brace for a bumpy ride, especially as we head into earnings season and look at guidance in the coming weeks.”
Monday will also officially kick off the first week of fourth-quarter earnings season with JPMorgan ( JPM ), the largest U.S. consumer bank, setting the stage for a softer-than-usual period for corporate finance as companies grapple with pressures. from inflation and high interest rates.
Wall Street analysts have steadily cut earnings estimates for S&P 500 companies in the final months of 2022.
Over the past quarter, analysts cut their EPS forecasts by an average of 6.5% from Sept. 30 to Dec. 31, according to FactSet Research. By comparison, the average downward revision to bottom-line EPS estimates per quarter has been 2.5% over the past five years, 3.3% over the past 10 years and 3.8% over the past 20 years, according to FactSet.
Alexandra Semenova is a correspondent for Yahoo Finance. Follow him on Twitter @alexandraandnyc
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