Dow rises to start the week as investors await Fed meeting, key inflation data

U.S. stocks opened higher Monday morning, ahead of a week with several highly-anticipated events in the ongoing fight against inflation.

The Dow Jones Industrial Average added 76 points, or 0.2%. The S&P 500 gained 0.2% and the Nasdaq Composite added 0.1%.

— Tanaya Macheel

January natural gas futures rallied to $7.058 per million BTUs early Monday, the highest in almost two week and the fourth straight day of gains.

Comstock, Antero, Southwestern and Range Resources are all higher by 4% or more in pre-market trading.

Crude oil headed south early Monday, with January West Texas Intermediate contracts briefly falling as low as $70.25, above Friday’s low of $70.08, which was the weakest since December 22, 2021. That was also the last time WTI traded below $70 a barrel.

So far this quarter, WTI Is down 10%, on pace for its second straight quarterly decline. It tumbled almost 25% in the third quarter and is now down almost 5% on the year.

The  Energy Select Sector SPDR Fund is up by more than 15.5% in the fourth quarter, on track for the 4th quarterly advance in the past five, and the most since the first quarter’s 38% rally. Quarter-to-date leaders include Halliburton, Schlumberger and Baker Hughes, all higher by 30% or more in the fourth quarter.

— Scott Schnipper, Gina Francolla

Investors betting on a pivot from the Federal Reserve in 2023 are likely to be disappointed, Mohamed El-Erian of Allianz said on CNBC’s “Squawk Box” on Monday.

“I think ultimately the Fed is going to have to maneuver this very, very difficult road towards the middle of next year,” he said. “I think we have clarity on what happens next with the Fed, but the further out you go in 2023, the harder it gets, and we’re not going to get rates coming down as the market expects.”

He added that while he doesn’t think a recession is necessary to bring down inflation, one is highly likely. And, he worries that inflation will get sticky around 4%, putting the Fed in a difficult position of potentially having to crush the economy further to bring price increases in check.

—Carmen Reinicke

These are some of the biggest stock moves in premarket trading Monday.

• Coupa Software – The maker of business spending management software jumped 26% in early morning trading after private-equity firm Thoma Bravo agreed to buy the company. The deal is worth $8 billion, or $81 per share in cash.
• Weber – The maker of grills and other outdoor cooking products saw its shares surge 21% after it agreed to be taken private by BDT Capital Partners for $2.32 billion in cash, or $8.05 per share.
• Horizon Therapeutics – The drugmaker’s shares gained 15% in the premarket after it agreed to be bought by Amgen for $116.50 per share in cash, with the deal valued at $27.8 billion.

For more movers check out our full list here.

— Peter Schacknow, Tanaya Macheel

Rivian shares slumped nearly 4% after the electric vehicle company announced it’s halting plans to make electric commercial vans in Europe.

The company first announced plans of the joint venture with Mercedes-Benz in September, saying that both companies would work together to manufacture two different EV vans.

“At this point in time, we believe focusing on our consumer business, as well as our existing commercial business, represent the most attractive near-term opportunities to maximize value for Rivian,”  said Rivian CEO RJ Scaringe, adding that company is open to working with Mercedes-Benz on future projects.

— Samantha Subin, Anmar Frangoul

Coupa Software shares were halted for news pending after Bloomberg News reported Sunday that the company was in advanced talks to be acquired by private equity firm Thoma Bravo.

Coupa was up 21% when it was halted.

— Fred Imbert

Horizon Therapeutics shares rallied 15% in the premarket after the company announced it will be acquired by Amgen for $116.50 per share, valuing the company at more than $27 billion on a fully diluted basis.

“In nearly 15 years, we have built one of the fastest growing and most respected companies in the biotechnology industry from the ground up. We have accomplished a tremendous amount for patients, their families and our customers, and created significant value for shareholders,” Horizon CEO  Tim Walbert said in a statement.

Amgen shares dipped 2%.

— Fred Imbert

U.S. tech giant Microsoft on Monday announced a 10-year partnership with the London Stock Exchange Group and took a near 4% stake in the U.K. bourse operator.

The partnership involves next-generation data and analytics, as well as cloud infrastructure solutions, according to a statement by the LSEG. It involves a new data infrastructure for the London exchange and analytics and modelling solutions with Microsoft Azure, AI, and Microsoft Teams.

Read the full story here.

– Matt Clinch

European markets retreated on Monday as investors look ahead to the last U.S. Federal Reserve meeting of 2022 this week, as well as the latest inflation reading.

The pan-European Stoxx 600 was down 0.6% in early trade, with retail stocks shedding 1.6% to lead losses as all sectors and major bourses opened in negative territory.

U.S. Treasury Secretary Janet Yellen foresees a “substantial reduction in inflation” by the end of next year, provided there’s no “unanticipated shock.”

Yellen, speaking in an interview on CBS’ “60 Minutes,” premised her optimism on shipping costs and gas prices coming down.

She cautioned, however, that recession risks remain and that the economy is still prone to shocks. But she said this could be buffered by a “very healthy” banking system, as well as business and household sectors.

“There’s a risk of a recession. But it certainly isn’t, in my view, something that is necessary to bring inflation down.”

The latest reading for the U.S. consumer price index is expected Tuesday. Analysts polled by Reuters expect the index rose 0.3% in November. Before this, October’s consumer price index inched up less than expected. Even with the slowdown in the inflation rate, it still remains well above the Fed’s 2% target.

—Lee Ying Shan

Dan Niles’ Satori Fund is beating the market this year. He shares what’s behind the outperformance and how he’s trading the market as recession looms.

Pro subscribers can read more here.

— Zavier Ong

Stock futures have slowly declined throughout the first hour of trading. Dow futures are down about 50 points, or around 0.2%, while Nasdaq 100 futures have dipped about 0.3%.

— Jesse Pound

One stock that could impact the Dow on Monday is drugmaker Amgen.

The Wall Street Journal reported on Sunday night that Amgen is in advanced talks to buy Horizon Therapeutics.

The Journal, citing people familiar with the discussions, reported the deal could be finalized by Monday.

Amgen closed on Friday at $278.65 per share, making it one of the most impactful stocks in the price-weighted Dow.

—Jesse Pound

The futures market was calm on Sunday night ahead of a key week in the fight against inflation. Futures for the Dow, S&P 500 and Nasdaq 100 were all within 0.1% of the flatline.

—Jesse Pound

The major averages fell on Friday to clinch a losing week, snapping a two-week winning streak for Wall Street.

Here are the key stats from last week:

• The Dow fell 2.77%, suffering its worst stretch since September.
• The S&P 500 fell 3.37%, suffering its worst stretch since September.
• The Nasdaq composite fell 3.99%, suffering its worst weekly stretch in a month.
• The Russell 2000 fell 5.08%, marking the worst week since September for small caps.
• All 11 sectors were negative for the week, led to the downside by energy.

—Jesse Pound, Christopher Hayes