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Indexes up: Dow 0.72%, S&P 500 0.75%, Nasdaq 0.91%
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Tesla up on robotaxi launch in Texas
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US business activity moderates; price pressures building
up
(Updates to afternoon)
By Stephen Culp
NEW YORK, June 23 (Reuters) - Wall Street gained ground
on Monday as the prospect of the U.S. Federal Reserve cutting
interest rates as early as July offset fears that Iran would
retaliate against U.S. airstrikes and further escalate the war
in the Middle East.
A broad rally pushed all three major U.S. stock indexes
modestly higher. Consumer discretionary stocks led the
gainers, with a solid boost from Tesla.
"The rally is a bit surprising," said Jay Hatfield, CEO and
portfolio manager at InfraCap in New York. "In a way the U.S.
attack puts an end to the uncertainty of whether the U.S. is
going to attack."
"The market action is extremely bullish because this is the
time frame in June when we're supposed to have a pullback,"
Hatfield added. "People do not want to sell in this market."
Federal Reserve Vice Chair Michelle Bowman said on Monday
that "it is time to consider adjusting the policy rate," as
risks to the job market outweigh inflationary concerns related
to tariffs. Federal Reserve Bank of Chicago president Austan
Goolsbee said that thus far, tariffs have had a more modest
economic impact than expected.
Financial markets are pricing in at least two 25-basis-point
rate cuts before year-end. The first cut is widely expected to
happen in September.
Tesla shares surged after the long-awaited launch
of the company's robotaxi service in Austin, Texas. The electric
vehicle maker's shares were last up 9.4%.
Israel continued to bombard Iran the day after the U.S.
joined the war.
Still,
oil prices tumbled after Iran's retaliation did not
include action to disrupt oil and gas tanker traffic through the
Strait of Hormuz. Tehran had warned it would close the Strait of
Hormuz, a crucial oil shipping route.
On the economics front, S&P Global's advance "flash"
purchasing managers' indexes (PMI) showed the U.S. economy is
expanding at a slightly more robust pace than analysts
anticipated. A separate report showed new home sales, while
under pressure from elevated borrowing costs, posted an
unexpected gain in May.
Later in the week, the Commerce Department's final take on
first-quarter GDP and its Personal Consumption Expenditures
(PCE) and Fed Chair Jerome Powell's congressional testimony are
likely to be parsed for clues regarding the near-term path of
monetary policy.
The Dow Jones Industrial Average rose 305.71 points,
or 0.72%, to 42,512.53, the S&P 500 gained 44.70 points,
or 0.75%, to 6,012.54 and the Nasdaq Composite
gained 177.08 points, or 0.91%, to 19,624.49.
Among the 11 major sectors of the S&P 500, consumer
discretionary stocks led the gainers, while energy was
the only sector in negative territory.
Among other movers, drugmaker Eli Lilly ( LLY ) rose 0.9%
after detailed trial data on rival Novo Nordisk's
experimental obesity drug CagriSema failed to impress investors.
Novo Nordisk's shares dipped 5.3%.
Fiserv's ( FI ) shares rose nearly 3.3% following its
announcement that it would launch a new digital asset platform.
Northern Trust ( NTRS ) jumped 7.2% after a Wall Street
Journal report said Bank of New York Mellon ( BK ) broached the
topic of a potential merger.
AI-server-maker Super Micro Computer ( SMCI ) dropped 6.8%
after it announced a private offering of $2 billion five-year
convertible bonds.
Quarterly results from sportswear company Nike ( NKE ) and
package delivery firm FedEx ( FDX ) are expected later in the
week.
Advancing issues outnumbered decliners by a 1.67-to-1 ratio
on the NYSE. There were 100 new highs and 66 new lows on the
NYSE.
On the Nasdaq, 2,389 stocks rose and 2,026 fell as advancing
issues outnumbered decliners by a 1.18-to-1 ratio.
The S&P 500 posted 12 new 52-week highs and 4 new lows while the
Nasdaq Composite recorded 77 new highs and 105 new lows.