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Wall Street Closes Mixed Amid Inflation Data and Earnings Reports

U.S. stock indexes experienced a mixed close on Monday as investors processed Friday's employment report and anticipated a week filled with inflation data and bank earnings. The Nasdaq fell due to mega-cap momentum stocks, while the Dow rose, supported by industrials.

Wall Street sign
Wall Street sign

S&P 500 Ends Slightly Higher; Economy Shows Resilience

The S&P 500 concluded the session with a nominal increase, while sectors such as transport, semiconductors, small-caps, and industrials outperformed the broader market. This suggests the economy is strong enough to endure additional rate hikes from the Federal Reserve.

Fed Interest Rate Hike Looms Amid Recession Fears

Investors are still coming to terms with the possibility of the Fed raising interest rates by 25 basis points in May, which could heighten the chances of a recession. Anxiety is also growing in anticipation of this week's CPI and PPI reports.

Stock Market Performance Following Jobs Report

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average experienced various gains and losses following Friday's Labor Department release of the March jobs report. The report indicated strong payroll growth and modest wage inflation cooling, hinting at the impact of the Fed's restrictive policy.

Financial Markets Expect Fed Funds Rate Increase

Financial markets have priced in a 72% likelihood of a 25 basis point increase to the Fed funds target rate after the May policy meeting, according to CME's FedWatch tool. Recent indicators imply a slowing but resilient economy capable of withstanding the Fed's hawkish policy as it aims to bring inflation closer to its 2% annual target.

Federal Reserve
Federal Reserve

Investors will closely monitor the consumer (CPI) and producer (PPI) price indexes, scheduled for release on Thursday and Friday, to better understand the extent of inflation cooling in March.

Bank Earnings Season to Shed Light on Sector Health

Citigroup, JPMorgan Chase, and Wells Fargo will unofficially begin the first-quarter earnings season on Friday, with investors scrutinizing the reports for insights on the sector's health following the collapse of two U.S. regional banks in March. Aggregate S&P 500 earnings are expected to be down 5.2% year-on-year, according to Refinitiv.

Stock Updates: Pioneer Natural Resources, Charles Schwab, and Chip Stocks

In other stock news, Pioneer Natural Resources jumped after reports of Exxon Mobil's preliminary acquisition talks, Charles Schwab advanced following its second-highest-ever influx of client assets, and chip stocks such as Micron Technology and Western Digital gained on Samsung Electronics' plans to reduce chip production.