The S&P 500 jumped to its highest level in 13 months on Monday as traders hoped the Federal Reserve will skip hiking rates when the central bank decides on policy Wednesday. The S&P 500 added 0.93% to close at 4,338.93, with gains steadily increasing throughout the trading day. The benchmark surpassed its high from last August and reached the best intraday and closing levels since late-April 2022. The Nasdaq Composite popped 1.53% to finish the day at 13,461.92, also reaching its highest levels since April 2022. The Dow Jones Industrial Average climbed 189.55 points, or 0.56%, to close at 34,066.33. Markets have come to expect that the Fed will skip a rate increase at this week’s meeting, with traders pricing in a roughly 72% chance that there will be no hike, according to the CME Group’s FedWatch tool. The Fed has hiked 10 consecutive times since starting this latest policy-tightening cycle in March 2022. Tuesday’s inflation data could help reinforce the case that inflation is subsiding, as economists expect the consumer price index to show inflation dropping to a 4% annual rate in May. That’s down from 4.9% in the prior month. The central bank will ultimately decide to skip a rate hike for June, according to Certuity co-chief investment officer Dylan Kremer, but the Fed likely isn’t done raising rates overall. “We don’t necessarily believe that there’s no more hikes in the cards, but we do think it’s a 50/50 chance of another hike happening in this cycle,” Kremer said. “All else equal, [the CPI report] could be a short-term tailwind as markets continue to grind higher.” However, market expectations are that Fed officials will emphasize a commitment to keep inflation at bay and come back with a final rate increase at July’s meeting before going on hold for the rest of the year. The S&P 500 last week reached a significant milestone, gaining more than 20% off its October low. The move caused many investors to signal the bear market is over. The benchmark has been on a bit of a hot streak, gaining four weeks in a row. The Nasdaq Composite has been on an even bigger tear, up 33% from its 52-week low. The Nasdaq and technology stocks led the way on Monday again, with Amazon and Tesla each up more than 2%. Asia-Pacific markets are trading mixed as investors return from a strong week and look forward to major central bank meetings scheduled ahead. The U.S. Federal Open Market Committee (FOMC) takes place on June 13-14, the European Central Bank meets on Thursday, and the Bank of Japan’s meeting will conclude on Friday. China’s Shenzhen Component led gains in the region and advanced 0.78%, closing at 10,873.74 and led by education stocks. The Shanghai Composite, however, ended the day marginally lower at 3,228.83, snapping a three day winning streak. Hong Kong’s Hang Seng index slid 0.13% in its final hour of trade in a mostly flat session. In Japan, the Nikkei 225 rose 0.52% to close at 32,434, continuing to hover near 33-year highs, while the Topix was up 0.65% to end the day at 2,238.77. South Korean stocks were lower, with the Kospi sliding 0.47% to end the day at 2,629.35 and retreat from its highest level in a year from last Friday. The Kosdaq gained 0.23% to end at 885.76. Australia’s markets were closed for a holiday. Oil prices fell by around $3 a barrel on Monday after analysts highlighted rising global supplies and concerns about demand growth just ahead of key inflation data and a U.S. Federal Reserve meeting later this week. Brent crude futures fell $2.95, or 3.9%, to settle at $71.84 a barrel, their lowest since Dec. 2021.U.S. West Texas Intermediate (WTI) crude fell $3.05, or 4.4%, to settle at $67.12 a barrel. Gold prices dipped on Monday as the dollar and bond yields firmed, while traders braced for a busy week of key U.S. inflation prints and major central bank policy meetings, with all eyes on the Federal Reserve. Spot gold fell 0.14% to $1,957.6471per ounce. U.S. gold futures settled 0.4% lower at $1,969.70. The dollar index edged up 0.12%, making gold more expensive for overseas buyers, while a rise in U.S. Treasury yields made zero-yielding bullion less attractive.
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