On Monday, the US benchmark equity indexes exhibited mixed results as investors positioned themselves ahead of the impending release of official inflation data for December and anticipated bank earnings later this week. The Dow Jones Industrial Average marked a notable rise of 0.9%, closing at 42,297.1, while the S&P 500 experienced a modest 0.2% increase, finishing at 5,836.2.
In contrast, the Nasdaq Composite faced a downturn, falling 0.4% to 19,088.1. Among the sectors, energy and materials took the lead in gains, whereas utilities saw the most substantial declines. Expectations are building as the official US producer price report for December is set to be unveiled on Tuesday, followed closely by consumer inflation data on Wednesday.
Predictions suggest that the US consumer price index has likely experienced a sequential increase of 0.3% and an annual rise of 2.9% last month, based on a consensus gathered by Bloomberg. Interestingly, the median inflation expectations from consumers in the US remained steady at 3% over the one-year horizon in December, according to a survey conducted by the Federal Reserve Bank of New York.
Furthermore, the outlook for inflation over a three-year span ticked up to 3%, a rise from 2.6%, while five-year inflation expectations saw a slight decline, dropping to 2.7% from 2.9%. In bond markets, the US 10-year yield increased by 1.6 basis points, reaching 4.79% on Monday, while the two-year rate remained relatively unchanged at 4.39%.
As for company-specific news, major financial institutions are gearing up to disclose their latest quarterly results later this week, with JPMorgan Chase, Bank of America, Wells Fargo, Morgan Stanley, Goldman Sachs, and Citigroup set to report. In a significant transaction within the healthcare sector, Johnson & Johnson has consented to acquire Intra-Cellular Therapies for approximately $14.6 billion in cash, aiming to bolster its neuroscience portfolio.
Following this news, shares of Johnson & Johnson climbed 1.7%, making it one of the top performers on the Dow, while Intra-Cellular's shares surged by an impressive 34%. Meanwhile, Humana distinguished itself as one of the top gainers on the S&P 500, with its stock up by 6.8%, following an adjustment from Wells Fargo, which raised its price target for the health insurer’s stock from $315 to $337.
On the other hand, Moderna's shares took a hit, plummeting nearly 17%—the largest drop on the S&P 500—after the company revised its full-year revenue outlook downward. In further developments, Edison International’s southern California utility is facing legal challenges, accused of its equipment's role in igniting a wildfire in Los Angeles, resulting in a 12% drop in Edison International stock.
Market activity in commodities also showed volatility, as West Texas Intermediate crude oil prices surged by 2.7%, closing at $78.67 a barrel. Analysts at D.A. Davidson attributed this rally to broader US sanctions on Russian oil combined with anticipated supply constraints from China and India. In the precious metals market, gold prices decreased by 1.3%, settling at $2,679.70 per troy ounce, while silver saw a significant decline of 3.4%, trading at $30.26 per ounce..