Stocks finished higher Monday, while the dollar built gains against its global peers and oil prices slumped, as investors prepared for a big week of consumer-focused data.
Stocks are riding a solid, although by no means spectacular, run of weekly gains following Friday's rally on Wall Street as investors pare bets on near-term rate hikes from the Federal Reserve amid slowing inflation prospects.
China's decision to cut a series of rates aimed at stoking credit growth, however, suggests overseas economies are having a more difficult time managing both their soaring energy costs as well as their post-pandemic recoveries.
China published data on Sunday showing slower-than-expected retail sales growth, a disappointing pace of industrial production and softer-than-forecast government investment.
The data clipped global oil prices as investors looked ahead to weakening demand from the world's biggest crude importer, with WTI futures for September delivery falling $4.55 lower in early New York trading to change hands at $87.54 per barrel.
That could help not only domestic inflation prospects, but add further downward pressure to U.S. gas prices, which the American Automobile Association pegged at $3.956 per gallon last night, the lowest since early March.
The strength of the U.S consumer, in fact, is likely to be in focus this week as investors pick through data on July retail sales, housing starts and second quarter earnings from Walmart (WMT), Target Corp (TGT) and Home Depot (HD).
With consumer sentiment improving, inflation slowing and the Atlanta Fed's GDPNow forecasting tool indicating a solid 2.5% third quarter growth rate, improving retail metrics, whether it be from overall sales or bullish near-term outlooks from that nation's biggest stores, could provide a firm base for investor confidence heading into the autumn months.
July retail sales data is due Wednesday at 8:30 am, just after July quarter updates from Walmart and Home Depot on Tuesday and Target and Lowe's (LOW) the following data.
Later that afternoon, investors will also get minutes from the Fed's July policy meeting, which may hint towards a late 2022 pause in rate hikes if inflation continues to trend in its current direction
In other markets, benchmark 10-year notes were pegged at 2.799% in early New York trading, while 2-year paper was changing hands at 3.205%. The dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.85% higher at 106.53.
Overnight in Asia, Japan's Nikkei 225 closed 1.14% higher, building on Friday's solid gains, as the yen drifted lower against the dollar, while China's rate cuts helped tech stocks, keeping losses for the region-wide MSCI ex-Japan benchmark at -0.25%.
On Wall Street, the S&P 500 finished up 0.4%, while the Dow Jones Industrial Average gained 151 points, or 0.45%, to 33,912. The tech-focused Nasdaq rose 0.62%.
In terms of individual stocks, Wells Fargo (WFC) shares edged 0.44% lower following a report from Bloomberg news that suggested the bank is preparing to significantly reduce its once-leading mortgage business.
Bloomberg said the shift, which is expected to include big changes in the way it deals with outside mortgage originators, is likely to lead to Wells Fargo focusing its home lending business to existing customers.
Turquoise Hill Resources (TRQ) shares tumbled 11.2% Monday after the Canadian mining group rejected a $2.7 billion buyout offer from Rio Tinto plc (RIO).
Kohl's Corp. (KSS) shares fell 0.4% after activists investors at Starboard Value have slashed their stake in the struggling retailer following attempts to buy it earlier this year.
Securities and Exchange Commission filings from late Friday suggest Starboard has cut around 80% of its 2.59% stake in Kohl's, which it began accumulating in January, over the three months ending in June. The fund now owns around 535,000 shares, according to its 13-F report.
