By Stephen Culp
NEW YORK (Reuters) -U.S. stocks moved higher and gold slid on Monday, as investors looked ahead to crucial inflation data and the U.S. Federal Reserve’s two-day monetary policy meeting.
In a busy week for central banks, the yen weakened for a second straight day as expectations faded for a less dovish policy pivot from the Bank of Japan.
All three major U.S. stock indexes turned higher as the session progressed, and while their gains remained muted, the benchmark S&P 500 briefly touched the year’s highest intraday level.
Gold dropped to a near three-week low as the dollar firmed and Treasury yields rose.
“There’s a lot we don’t know about this week: we don’t know what inflation is going to be, we don’t we don’t know the Fed is going to do and we don’t know what retail sales are going to do,” said Rob Haworth, senior investment strategist at CFRA Research in Seattle. “And on the back of all that investors seem to be feeling OK about the market.”
The Labor Department’s closely watched Consumer Price Index (CPI) report, due on Tuesday, is expected to show inflation still cooling but staying well above the Fed’s 2% annual target.
The Federal Open Markets Committee’s (FOMC) two-day monetary policy meeting will end on Wednesday with its interest rate decision and the release of its summary economic projections.
While the Fed is largely expected to let the Fed funds target rate stand at 5.25%-5.50%, market participants will parse the central bank’s dot plot and summary economic projections to assess its likely path forward.
Interest rate decisions are also expected from the European Central Bank (ECB) on Wednesday and the Bank of England (BoE) on Thursday.
“We’ve had coordinated central bank policies for some time, locking arms as they battle inflation and send rates to high levels,” Haworth added. “But they could start to break ranks. Inflation seems to be falling faster and the economy weakening more in Europe than in the U.S.”
The Dow Jones Industrial Average rose 96.73 points, or 0.27%, to 36,344.6, the S&P 500 gained 13.15 points, or 0.29%, at 4,617.52 and the Nasdaq Composite dropped 34.64 points, or 0.24%, to 14,418.00.
European shares notched modest gains ahead of critical U.S. economic data and interest rate decisions from major central banks.
The pan-European STOXX 600 index rose 0.30% and MSCI’s gauge of stocks across the globe gained 0.22%.
Emerging market stocks lost 0.15%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.22% lower, while Japan’s Nikkei rose 1.50%.
U.S. Treasury yields pared gains after 3- and 10-year note auctions.
Benchmark 10-year notes last rose 3/32 in price to yield 4.2333%, from 4.245% late on Friday.
The 30-year bond last fell 4/32 in price to yield 4.3258%, from 4.326% late on Friday.
The greenback edged higher against a basket of world currencies ahead of Tuesday’s CPI report, while the yen slid with fading hopes for a Bank of Japan pivot in December.
The dollar index rose 0.05%, with the euro unchanged at $1.0761.
The yen weakened 0.83% to 146.13 per dollar, while Sterling was last trading at $1.2558, up 0.10% on the day.
Oil prices rose slightly as investors balanced concerns over OPEC+ production cuts against worries of softening demand in the coming year.
U.S. crude advanced 0.13% to settle at $71.32 per barrel, while Brent settled at $76.03 per barrel, up 0.25% on the day.
Gold slid to a near three-week low as the dollar firmed in advance of Tuesday’s CPI report.
Spot gold dropped 1.1% to $1,980.80 an ounce.
(Reporting by Stephen Culp; Additional reporting by Wayne Cole and Lawrence White; Editing by Sharon Singleton and Richard Chang)
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