Investing.com – Wall Street traded higher on Monday after inflation and consumer data, while oil slumped nearly 2%
At 15:08GMT, or 11:08AM ET, the Dow 30 jumped 105 points, or 0.57%, the S&P 500 rose 11 points, or 0.50%, while the tech-heavy Nasdaq Composite gained 12 points, or 0.22%.
On the data front, while core personal consumption expenditure (PCE) index for July inched up just 0.1% from the previous month, the core PCE price index rose at an annualized rate of 1.6% for the fifth consecutive month, surprising expectations for it to ease to a 1.5% advance.
The core data is considered to be the Fed’s preferred inflation gauge and is used as a tool to help determine whether to raise or lower interest rates, with the aim of keeping inflation at a rate of 2% or below.
At the same time, personal income and spending for the same month also increased in line with expectations along with positive upward revisions to June’s readings.
This ahead of Friday’s publication of the August employment report that many analysts have suggested could be the key factor for the Federal Reserve’s decision in September.
Markets continued to evaluate Fed chair Janet Yellen’s remarks from last Friday that “case for an increase in the federal funds rate has strengthened in recent months”.
The U.S. central bank vice chairman Stanley Fischer followed up confirming that a rate hike in September is a possibility and there could in fact be two increases this year.
Fed fund futures are currently pricing in the possibility of a rate hike for the September meeting at 27%, while odds for a move in December were 58.6%, according to Investing.com’s Fed Rate Monitor Tool.
The increased chance of a rate hike pushed the dollar to a two-week high, while keeping gold near 5-week lows.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, gained 0.25% to 95.72 by 15:10GMT, or 11:10AM ET,, while gold for December delivery on the Comex division of the New York Mercantile Exchange slipped 0.03%, or $0.35, to $1,325.55.
Meanwhile, the stronger dollar also served to put further downward pressure on oil prices even as fading hopes of a production freeze weighed on sentiment.
Chances that OPEC would reach an agreement to stabilize markets at an informal meeting to be held next month were reduced on news that Iraq had increased production in August, while Iran said it would only cooperate in talks to freeze output if fellow exporters recognized its right to fully regain market share.
U.S. crude futures lost 1.64% to $46.86 by 15:50GMT, or 11:50AM ET, while Brent oil fell 1.62% to $49.34.