U.S. stocks experienced minimal changes on Monday, with traders monitoring upcoming inflation data that could impact expectations for future interest-rate cuts. The Dow Jones Industrial Average decreased by 0.03 percent, the S&P 500 declined by 0.04 percent, and the Nasdaq Composite Index saw a slight increase of 0.03 percent.
Among the primary S&P 500 sectors, six ended lower, with energy and health sectors leading the losses, while real estate and consumer discretionary sectors recorded gains. Wells Fargo raised its year-end target for the S&P 500 to 5,535, the highest target among Wall Street brokerages, citing optimism about artificial intelligence and potential reduced borrowing costs.
The S&P 500 has already seen a 9 percent increase this year, driven by expectations of interest rate cuts and growing investor interest in the AI sector. The shift towards longer-term growth metrics has diverted attention from traditional valuation measures, according to Wells Fargo.
However, despite Wells Fargo’s bullish outlook, the consensus among 15 other Wall Street analysts forecasts the S&P 500 to end the year at 5,062, a 2 percent decrease from its current level. Seven analysts expect a decline in the index, with price targets ranging from 4,200 to 5,500.
Chief economist Torsten Slok of Apollo Global Management highlighted recent data indicating a rebound in manufacturing activity and signs of inflation increasing, suggesting a potential market slowdown. Slok emphasized the importance of the repricing of rates, indicating expectations for a slowdown in the next few quarters.
The anticipation is now focused on March’s consumer and producer price index (CPI) readings to gauge the Federal Reserve’s progress in addressing inflation. The March CPI data is particularly crucial as it could signal when the central bank might begin reducing interest rates.
