By Caroline Valetkevitch
NEW YORK (Reuters) – Stock indexes fell broadly on Monday, while 10-year U.S. Treasury yields rose to a 14-month high as the resilience of the U.S. economy and persistent inflation spurred investors to assess the possibility that the Federal Reserve will suspend its easing cycle.
It reached its highest level in more than two years. The Nasdaq fell, while the benchmark index rebounded from a two-month low to finish with a slight gain.
Investors are eagerly awaiting Wednesday’s U.S. Consumer Price Index reading. Any upside surprises could fuel fears of a pause in rate cuts by the Fed. A Reuters poll of economists gives a median forecast of an annual rise of 2.9%, up from 2.7% in November, and a monthly rise of 0.3%.
U.S. producer price data is due Tuesday.
The December jobs report on Friday showed that 256,000 workers were added to the nonfarm workforce in the United States, the largest increase since March and well above expectations for an increase of 160,000.
Investors are also concerned about whether inflation could accelerate due to the tariff, migration and tax policies of the new administration of U.S. President-elect Donald Trump.
Markets are pricing in about 27 basis points of cuts from the Fed this year, with a 52.9% probability of a cut in June.
“This is going to play out over the next few days until the inflation news settles,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“The Fed has become more hawkish at the moment,” and investors are considering the possibility that the United States has seen the end of rate cuts for now, Cardillo added.
The next Fed policy meeting is scheduled for January 28-29.
The yield on the benchmark 10-year bond hit a 14-month high of 4.805% and was last up 1.6 basis points at 4.79%.
On Wall Street, the index rose 358.67 points, or 0.86 percent, to 42,297.12, the S&P 500 rose 9.18 points, or 0.16 percent, to 5,836.22 and fell by 73.53 points, or 0.38%, to 19,088.10.
MSCI’s index of stocks around the world also fell 2.07 points, or 0.25 percent, to 831.79. The index fell 0.55%.
The fourth quarter earnings season in the United States also begins this week with results due from some of the largest American banks, including JPMorgan Chase (NYSE:).
“The question investors face is what is more important: strong corporate profits, which come from a strong economy, or lower inflation, which comes from a weaker economy,” said Oliver Pursche, senior vice president and advisor at Wealthspire Advisors in Westport. Connecticut.
“Most investors would prefer a strong economy with slightly elevated inflation,” he said.
UnitedHealth Group’s (NYSE:) stock’s 3.9% gain helped both the Dow and the S&P 500. President Joe Biden’s administration has proposed 2026 reimbursement rates for Medicare Advantage plans managed by private insurers, which would result in a 2.2% increase in payments.
The , which measures the greenback against a basket of currencies, rose 0.26% to 109.94. Earlier in the session, it hit its highest level in more than two years, peaking at 110.17, reinforcing its recent rally.
The euro was down 0.23% at $1.022. Against the Japanese yen, the dollar weakened by 0.03% to
157.64.
Rising energy prices have added to investors’ unease over inflation.
Oil prices rose about 2% to their highest level in four months as traders expected broader U.S. sanctions on Russian oil to force Indian and Chinese buyers to seek alternative suppliers .
rose $2.25 to settle at $78.82 per barrel and rose $1.25 to settle at $81.01.
With the dollar rising, gold fell 0.9% to $2,664.49 an ounce. Gold generally struggles to compete for investor cash in an environment of high yields and the dollar.
