US stocks are drifting in relatively quiet trading after a rollercoaster end to last week left them a bit shy of their records.
The S&P 500 was 0.1 per cent higher in mid-afternoon trading, coming off a stretch where a 1.2 per cent drop immediately flipped to a 1.1 per cent gain. The Dow Jones was up 19 points, or 0.1 per cent, and the Nasdaq composite was 0.2 per cent higher. The Australian sharemarket is set ro advance, with futures at 5.01am AEST pointing to a gain of 36 points, or 0.5 per cent, at the open. The ASX added 0.2 per cent on Monday.The Australian dollar rose. It was 0.4 per cent higher at 66.
Fed Chair Jerome Powell said recently he still expects cuts to interest rates this year, but the central bank needs additional confirmation inflation is heading toward its target of 2 per cent. The Fed has been holding its main interest rate at the highest level in more than two decades, hoping to grind down enough on the economy and prices for investments to get inflation under control. The risk of holding rates too high for too long is it could cause a recession.
Such hopes have helped the stock market’s gains broaden out beyond the handful of Big Tech stocks responsible for the majority of last year’s gain. Energy producers in the S&P 500 have jumped nearly 17 per cent this year, after dropping nearly 5 per cent last year, on expectations that a recent rebound in energy prices will mean fatter profits in the future.
But critics say stock prices already look expensive given their huge run of more than 20 per cent from November into March. That means “achieving ambitious earnings forecasts has become paramount,” according to Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.To that end, this week will bring the start of the latest earnings reporting season. Delta Air Lines, JPMorgan Chase and other banks will headline the earliest days of the reporting period.
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