By Shristi Achar A and Sruthi Shankar
Wall Street's main indexes rose on Monday as investors awaited inflation data and the Federal Reserve's interest rate decision this week, while Oracle Corp hit a record high ahead of its quarterly results later in the day.
The U.S. Labor Department's consumer price index reading on Tuesday, also the first day of the Fed's meeting, is expected to show inflation cooled slightly in May but core prices are likely to have remained elevated.
Traders see a 74% chance of the central bank holding interest rates at the 5%-5.25% range on Wednesday, while pricing in a 51% chance of a 25-basis-point increase in July, according to the CME Fedwatch tool.
"The Fed is continuing to walk this very fine line between are we going to tighten too much and drive the economy into a recession or are we not going to tighten enough and keep inflation high," said Melissa Brown, global head of applied research at Qontigo.
"Until we see several months of low or declining inflation, the headline number is still going to be above the 2% target that the Fed has set. The market does seem to think that rates are going to stay stable."
The benchmark S&P 500 notched gains for a fourth straight week on Friday, building on a 20% rise from its October 2022 lows, heralding the start of a new bull market as defined by some market participants.
A rally in megacap stocks, better-than-expected quarterly earnings and hopes that the Fed might be nearing the end of its tightening cycle have lifted indexes in recent weeks.
Since last week, the rally has broadened beyond megacaps to include more economically sensitive sectors such as energy and industrials, and also small-cap stocks as data continues to show a resilient U.S. economy despite higher interest rates.
Goldman Sachs on Friday raised its year-end price target for the benchmark S&P 500 to 4,500 from 4,000, citing the broadening of the market rally.
The CBOE volatility index edged up after hitting pre-pandemic levels in the previous week, up 0.89 point to 14.72.
Oracle advanced 4.3%, hitting an all-time high as J.P. Morgan hiked its price target to $109, ahead of the cloud and enterprise software firm's fourth-quarter results later in the day.
Technology stocks led gains among the 11 major sectors of the S&P 500 while energy stocks fell 0.5%, tracking a decline in crude prices. [O/R]
At 9:43 a.m. ET, the Dow Jones Industrial Average was up 115.88 points, or 0.34%, at 33,992.66, the S&P 500 was up 12.75 points, or 0.30%, at 4,311.61, and the Nasdaq Composite was up 62.98 points, or 0.47%, at 13,322.12.
Nasdaq Inc slumped 9.8% after the exchange operator said it would buy Thoma Bravo-owned software firm Adenza for $10.5 billion.
Biogen shares edged up 1.0% after a U.S. FDA panel of advisers unanimously backed its Alzheimer's drug, Leqembi, raising hopes that a traditional approval for the treatment might not come with major new safety warnings.
Adobe shares gained 1.6% after Jefferies increased the Photoshop maker's price target to $530, the second highest on Wall Street.
Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE and by a 1.58-to-1 ratio on the Nasdaq.
The S&P index recorded six new 52-week highs and three new lows, while the Nasdaq recorded 32 new highs and 28 new lows.
(Reporting by Shristi Achar A and Sruthi Shankar in Bengaluru; Editing by Vinay Dwivedi)
