Wall Street indexes were set to rise on Monday after their worst week in several months, with investors tracking the impact of potential changes in taxation on corporate profits and the effects of inflation on monetary policy.
The index fell between 1.6 percent and 2.2 percent last week, the S&P 500 sank for five straight days as a rise in August producer prices and a drop in jobless claims sparked fears that the Federal Reserve may not be able to do so as soon as this year. Promotion may start soon.
August consumer price data, due Tuesday, is likely to be a key signal for the Fed’s decision on tougher policy. A Reuters poll expects readings to remain stable through July.
“There are some inflation data coming out this week and the market is looking to next week’s Fed meeting to provide a hint of color with the jobs report,” said Thomas Hayes, managing member of Great Hill Capital in New York.
“The hopes are now that the September meeting will be irrelevant, in that they will punt by November on any concrete plans for the taper.”
Also on the radar is the Biden government’s corporate tax hike plan. According to two people familiar with the matter, there has been a proposal by US House Democrats to raise the corporate tax rate from 21 percent to 26.5 percent.
Analysts at Goldman Sachs have predicted a 25 percent increase in the U.S. domestic corporate tax rate and the passage of nearly half of the proposed increase in tax rates on foreign income will reduce S&P 500 earnings by 5 percent in 2022.
Investors will also be looking at retail sales data later this week to see how the recent surge in COVID-19 cases has affected consumer spending.
The S&P 500 e-minis were up 25.5 points, or 0.58 percent, at 08:29 a.m. ET. The Dow e-minis were up 181 points, or 0.52 percent, while the Nasdaq 100 e-minis were up 88.5 points, or 0.57 percent.
Apple Inc jumped 1.2 percent in premarket trading Friday after a mixed court ruling against the iPhone maker in Epic Games’ antitrust case, plunging nearly $90 billion from its market value.
Energy stocks benefited from strong oil prices, while major Wall Street banks posted modest gains in US Treasury yields.
Buying in sectors such as energy, financials and industry, which are expected to benefit from economic recovery this year, have put the S&P 500 on a seven-month winning streak this year.
But rising infections and staggered vaccination rates for the delta COVID-19 variant have dampened hopes of an economic recovery in recent weeks.
Market participants expect a major correction in the stocks by the end of the year after a strong bull run.
Biotechnology firm Regenxbio Inc. grew more than 20 percent after partnering with peer AbbVie to develop and sell a gene therapy candidate to treat chronic retinal diseases.
US-listed Chinese stocks, including Alibaba Group Holding, fell in premarket trading after China outlined new rules for major technology firms in the mainland.
By Amber Warik and Devik Jain
This News Originally From – The Epoch Times