1674497360 Dow climbs 200 points Nasdaq jumps 1 as investors weigh

Dow climbs 200 points, Nasdaq jumps 1% as investors weigh next Fed rate move

Citi's Kristen Bitterly: The recent stock rally is only forcing the Fed to step up its hawkish rhetoric

Shares rose on Monday as investors considered a possible slowdown in rate hikes by the Federal Reserve and braced for a busy earnings week.

The Dow Jones Industrial Average rose 287 points, or 0.86%, while the S&P 500 gained 1.3%. The Nasdaq Composite rose 2%.

Semiconductor stocks and shares of Tesla and Apple rose on hopes that a reopening in China would boost their businesses. Both big tech names have recently struggled with temporary shutdowns and lost production as the country coped with rising Covid-19 cases.

Investors have begun to weigh the possibility that the Fed is preparing to slow the pace of its inflation-fighting rate hikes after months of aggressive tightening. Economic data released last week showed a fall in wholesale prices and retail sales, along with comments from central bank officials appeared to signal a slowdown.

Comments by Fed Governor Christopher Waller on Friday that appeared to support a quarter-point rate hike at the next meeting boosted investors’ hopes of a cut. A report from the Wall Street Journal on Sunday pointed to the possibility of a spring pause in interest rate hikes – a sign that the Fed could be nearing the end of its rate hike campaign.

“Bulls run on the short-term momentum, ‘soft landing’ narrative and it’s hard to dispute recent price action,” Jonathan Krinsky, BTIG’s chief market technician, wrote in a note on Monday. “On the other hand, long-term trends are still somewhat down, and we’re always skeptical of such a widely watched ‘breakout’, especially after a big run.”

Markets have priced in a 99.7% chance of a 25 basis point hike, according to data from CME Group, which would bring the rate to a target range of 4.5% to 4.75%.

Earnings reports could keep the market busy as about 40% of the Dow release their latest financial results, offering more insight into how companies are weathering inflation and interest rates. Some big names on deck are Microsoft, IBM, Tesla, Visa and Mastercard.