Stocks close higher for fourth straight session ahead of key inflation report, Dow rises 200 points

The S&P 500 rose Monday for a fourth day for the first time since July 7, while the Nasdaq Composite and Nasdaq-100 indexes did the same for the first time since July 8.

Animal spirits returned for the iShares Russell 1K Growth ETF (IWF), too — also higher for a 4th day for the first time July 8.

No surprise, the dollar index fell for a fourth straight day.

In commodities, silver was the standout, surging 5.82% to $19.86, the most since July 28 but the first 6-day rally since the day Russia invaded Ukraine (Feb. 24). Corn and soybean contracts both reached their highest since late June -- bad news for agricultural input costs and, indirectly, food inflation.

-- Scott Schnipper with Christopher Hayes and Gina Francolla

Inflation likely eased a bit in August as gasoline prices declined, but probably not enough to make a difference for Federal Reserve policymakers.

The consumer price index is due out Tuesday at 8:30 a.m. ET. It's expected to show that prices excluding food and fuel rose 0.3% from July and 6% from a year ago. Including those two sectors, so-called headline CPI is projected to decline 0.1% for the month but still be up 8% on an annual basis.

For headline CPI, it will be the second month in a row with little change, after July showed prices flat. But for core, it would be the second straight month of a 0.3% increase.

While both numbers point to slower gains in prices, Fed officials have said in recent days that one month's report won't sway them in their fight against inflation. The central bank is widely expected next week to approve its third consecutive 0.75 percentage point interest rate hike.

If the Fed follows through with the market's expectation, that will take the central bank's benchmark funds rate to a range of 3%-3.25%. That would be the highest level for the rate since early 2008.

—Jeff Cox

Stocks finished up for their fourth straight session. The Nasdaq Composite rose nearly 1.3% to lead the way. The Dow underperformed but still rose more than 200 points.

— Jesse Pound

Bridgewater co-CIO Greg Jensen said the belief that inflation is going to normalize to around 3% over time is too optimistic. The widely followed strategist believes that price pressures are going to stay "stubbornly higher than the market expects," he said at the annual SALT conference in New York. Persistent inflation, combined with slowing growth in the U.S., will continue to weigh on asset prices, Jensen said.

Asked about where to put money to work right now, Jensen said Latin America and commodity assets look relatively attractive.

— Yun Li

Alphabet and Microsoft aren't doing their part to help the market much since the latest move higher began last week, the Strategas technical and macro research team led by Chris Verrone said in a note Monday.

"For as strong as some corners of the market were last week, we also wouldn't describe important weights like GOOGL or MSFT as exhibiting compelling leadership," they wrote. Both stocks have exhibited only weak rallies. In late Monday trading, while the S&P 500 was about 0.92% higher, Microsoft added 0.69% while Google-parent Alphabet fell 0.24%.

By contrast, financials and consumer discretionary stocks have improved lately, but aren't yet dominant, Strategas said. Although crude oil has been soft lately, "ConocoPhillips acts great," as does Albemarle and Ulta Beauty.

-- Scott Schnipper

Alphabet and Microsoft aren't doing their part to help the market much since the latest move higher began last week, the Strategas technical and macro research team led by Chris Verrone said in a note Monday.

"For as strong as some corners of the market were last week, we also wouldn't describe important weights like GOOGL or MSFT as exhibiting compelling leadership," they wrote. Both stocks have exhibited only weak rallies. In late Monday trading, while the S&P 500 was about 0.92% higher, Microsoft added 0.69% while Google-parent Alphabet fell 0.24%.

By contrast, financials and consumer discretionary stocks have improved lately, but aren't yet dominant, Strategas said. Although crude oil has been soft lately, "ConocoPhillips acts great," as does Albemarle and Ulta Beauty.

-- Scott Schnipper

The continued rally for the stock market looks reasonably healthy in the short term, but it is probably too early to call for the all-clear, according to Jeff Mills of Bryn Mawr Trust.

"That 3,900 level on the S&P 500 is important technically, and the move that we saw off of it has been fairly strong at this point. I don't know if it is strong enough to call it a very clear reversal, but in terms of the breadth and strength of the bounce it has been reasonably encouraging," Mills said.

Investor positioning and economic data may have also helped the recent rally, Mills said, but the stubbornly high yields in the Treasury market are a cause for skepticism. The 10-year Treasury yield is up about 4 basis points on Monday afternoon, trading near 3.364%.

"You saw this in the June rally as well where the [stock] market kind of bought into this possibility of a Fed pivot or a less-difficult outcome for the economy, but the bond market never really did. ... And by and large, that's what you saw last week as well," Mills said.

"As long as short-term interest rates continue to push higher, the downtrend that still exists in the equity market is probably going to remain intact, in my opinion," he added.

— Jesse Pound

Ark Invest's Cathie Wood once again warned investors that deflation is on the horizon. The innovation-focused investor noted that a slew of commodity prices have fallen from their record highs, including lumber, copper, iron ore and oil. Wood recently predicted that deflationary forces will trigger a big policy reversal from the Federal Reserve in three to six months.

— Yun Li

Some iPhone 14 models are already showing signs of strong demand among consumers less than a week after Apple's latest launch event and even as inflation hovers near record highs.

That's according to wait times deciphered by analysts which indicate certain models, in particular, are already experiencing shipping delays that surpass their predecessors. These extended lead times could be a sign of strengthening demand among consumers despite fears of slowing spending, analysts say.

CNBC Pro readers can check out the full story here.

— Samantha Subin

Energy is the best performing sector in the S&P 500 on Monday, bolstered by a rebound for oil prices.

APA gained 5%, while Devon Energy rose more than 4%. Marathon Oil, Hess, Pioneer Natural Resources and Williams all added more than 3%.

In the commodities market, futures for U.S. benchmark West Texas intermediate and European benchmark Brent were both up more than 1%.

—Jesse Pound

Check out some of Monday's biggest market movers:

Gilead Sciences — Gilead shares rose 3.8% after the company revealed it settled a patent case over its HIV therapies with generic drugmakers.

Carvana — Carvana popped 7.8% after being upgraded to overweight from neutral by Piper Sandler analyst Alexander Potter, who called the stock "grossly undervalued."

Bristol-Myers Squibb — Bristol-Myers Squibb's stock jumped 5.4% after the U.S. Food and Drug Administration approved the company's oral treatment for plaque psoriasis known as Sotyktu.

Read the full story here.

— Michelle Fox

The S&P 500 utilities added to their strong 2022 gains on Monday, with the Utilities Select Sector SPDR Fund (XLU) hitting a record high.

The fund traded 0.4% higher and is now up 8.6% year to date. The ETF has also been on fire in the third quarter, gaining nearly 11% in that time.

Several utility stocks reached either record or 52-week highs Monday, including American Electric Power, Constellation Energy, CenterPoint Energy and Consolidated Edison. Sempra Energy and Xcel Energy also posted all-time highs.

Check out some other stocks that made 52-week or all-time highs:

• Genuine Parts trading at all-time high levels back to its IPO in 1948
• Ulta trading at all-time high levels back to its IPO in October 2007
• Progressive trading at all-time highs back to its IPO in 1971
• Cigna trading at all-time high levels back to its IPO in 1972
• Republic Services trading at all-time high levels back to its IPO in 1998
• Clean Harbors trading at all-time highs back to its IPO in November 1987
• Hubbell trading at all-time highs back through our history to 1972
• Silgan Holdings trading at all-time highs back to when it began trading in 1997
• PG&E trading at levels not seen since March 2020
• Change Healthcare trading at all-time highs back to its IPO in June 2019
• Driven Brands trading at levels not seen since February 2021
• Graphic Packaging trading at all-time highs back to its IPO in June 1992

— Christopher Hayes, Fred Imbert

The summer market rally built on misplaced expectations of a dovish Federal Reserve has recently taken a significant hit, according to Principal Global Investors chief global strategist Seema Shah.

"In mid-June, as oil prices started to decline, many investors began to believe that the oncoming peak in inflation would permit the Fed to wrap up its rate hiking cycle," said Shah. "Markets also reasoned that an economic slowdown could prompt the Fed to stop monetary tightening early."

At the Jackson Hole Symposium and since, however, the Fed has been firm in its stance that it will do what it takes to combat high inflation and keep with tightening policy until the job is done.

"The Fed's stance is quite clear," said Shah. "Due to the enormity of the inflation task ahead, a weakening economy cannot stand in the way of further monetary tightening, and rates will need to remain at a restrictive setting for a prolonged period."

This means investors need to be prepared for more rate hikes, and higher interest rates, ahead.

"For investors: Position portfolios for a more sustained monetary tightening campaign," said Shah.

—Carmen Reinicke

A decline in gas prices is adding to hopes that inflation is cooling, according to the New York Fed's August Survey of Consumer Expectations released Monday.

The report showed that survey respondents in August expected the annual inflation rate will be 5.7% a year from now, a drop from 6.2% expected in July. It's the lowest level since October 2021.

Meanwhile, three-year inflation expectations fell to 2.8%, down from 3.2% the prior month. The figure is tied for the lowest level for that measure since November 2020.

Those lowered expectations comes ahead of the Federal Reserve's meeting next week when the central bank is widely expected to approve another 0.75 percentage point rate hike to fight inflation.

Read the full story on the New York Fed survey here.

— Sarah Min, Jeff Cox

Stock markets "look set for a short-term recovery and a slightly longer period of consolidation in our view following last week's anticipated rebound from key levels," London-based Credit Suisse technical analysts led by David Sneddon wrote Monday.

Stocks "rebounded strongly" late last week "after failing to sustain a break below the short-term uptrend from June, reinforcing our call for a short period of consolidation."

The S&P 500's next resistance level is 4120, right around where it's trading Monday morning, Credit Suisse said. Even more important resistance next comes in to play around 4150-4158, which is the top end of the 3950-4150 range that CS sees for the current market.

"Post this potential consolidation phase, our core outlook stays negative and we look for an eventual clear break below the uptrend from June, with support seen next at 3861, ahead of the potential uptrend from the March 2020 low at 3830. Big picture, we continue to look for an eventual move back to the YTD low at 3637 and beyond," the CS chart watchers warned.

As a result, the Credit Suisse "house view is negative on the S&P 500 on a 3-6 month horizon."

-- Scott Schnipper; CNBC's Michael Bloom contributed

The major averages built on their opening gains, and all three are up more than 1%.

The Dow is now up more than 300 points, and its top performers include American Express, Apple, Chevron and 3M.

— Jesse Pound

Forty percent of stocks in the S&P 1500 index (that's the S&P 500, S&P Midcap 400 and S&P Smallcap 600) had lowered their current year earnings forecasts as of August 29, up from 28% at the same time last year, according to a Friday report from Fitch Ratings, citing FactSet numbers.

"EBITDA growth softened a bit in 2Q22," wrote analysts led by Carla Norfleet Taylor. "Downward revisions to consensus expectations for 2023 have been slow but will likely accelerate as monetary tightening continues in order to reduce inflation and economic growth slows."

Fitch expects that the state of "corporate profitability will likely be a leading indicator of the impending recession. We anticipate earnings will increasingly weaken ahead of the official declaration of a downturn."

Fitch also looked at Bureau of Economic Analysis data to gauge the performance of earnings in similar environments and found corporate profits fell an average of four quarters prior to past downturns. "The peak-to-trough decline in after-tax profits during the last 12 recessions averaged 19%, with revenue and margin declines varying across sectors. After-tax profits as a percentage of GDP declined by an average of 3%."

-- Scott Schnipper

The three major averages rose at the open, with the Dow gaining about 120 points, or 0.4%. The S&P 500 and Nasdaq Composite climbed about 0.6% each.

— Jesse Pound

A counterattack by Ukraine in recent days has put the Russia military on its heels and allowed the Ukrainian army to reclaim key territory in the eastern part of the country.

The Ukrainian Defense Ministry said Sunday that it has retaken many villages and towns around Kharkiv, the nation's second largest city. The move appears to have put some Russian forces in retreat.

"In the face of Ukrainian advances, Russia has likely ordered the withdrawal of its troops from the entirety of occupied Kharkiv Oblast west of the Oskil River," the United Kingdom's Ministry of Defence said on Twitter. "Ukraine has recaptured territory at least twice the size of Greater London."

To be sure, the Institute for the Study of War said that the current offensive would not be enough to end the war.

— Jesse Pound, Holly Ellyat

Wharton professor Jeremy Siegel said on "Squawk Box" that he thinks the stock market could see some upside surprises from here, and one of the main reasons for that is weakening U.S. dollar.

The greenback has slipped over the past week, especially against the euro, as the European Central Bank announced a large rate hike and signaled that more hawkishness is ahead.

"The ECB being more aggressive means the dollar can go down. It really it has gone down. That's very, very important in terms of the foreign earnings," Siegel said.

— Jesse Pound

JPMorgan pointed to falling gas prices as indication that inflation will slow in coming months. "In terms of inflation outlook, we expect a further confirmation of a peak, and a move lower, as US gasoline prices are down 20% from highs, and Brent has stalled below $100," the firm said Monday in a note to clients.

Energy prices have been a key driver of inflation after Russia's invasion sent global energy prices surging.

The national average for a gallon of regular gasoline hit a record above $5 in June. But since then, a retreat in oil prices has brought down prices at the pump. The national average stood at $3.716 on Monday, according to AAA.

"[F]alling commodity prices might be welcomed, as they work to reduce one of key headwinds, the inflationary pressure," the firm added.

— Pippa Stevens

Corporate earnings estimates are still too high, and that presents more downside risk for stocks, according to TriVariate Research founder Adam Parker.

The second quarter earnings season was a mixed bag for Wall Street, with notable weakness in parts of the retail and tech sectors even as overall numbers largely held up. However, that bright side may soon disappear, Parker said.

"The key things to watch will be any signs of margin erosion or inventory builds in the October earnings season. Our suspicion is that a combination of estimate reductions and a hawkish Fed will make for choppy and a potentially lower equity market over the coming weeks," Parker wrote in a note to clients on Sunday.

Parker's base case for downside risk is around 3,700 on the S&P 500, which would be about a 7% decline from here.

— Jesse Pound

Activist investor and Third Point hedge fund manager Dan Loeb indicated in a tweet that he's going to no longer push Disney to spin off ESPN.

Loeb's reversal comes after he took about a $1 billion stake in Disney in the second quarter. Disney's shares have rallied about 16% the last three months. Disney CEO Bob Chapek told journalists at this weekend's D23 Expo that he has big plans for ESPN.

The shares were up another 0.7% in premarket trading Monday.

—Jeff Cox

The White House has plans to expand curbs on U.S. shipments to China of chips used for artificial intelligence and chipmaking tools, Reuters reported citing people familiar with the matter.

According to the report, the Commerce Department aims to publish regulations based on ruled communicated to KLA, Lam Research and Applied Materials. Shares of the three chipmakers dipped in the premarket.

A Commerce Department spokesperson declined Reuters' request to comment on specific regulations, but note that it is "taking a comprehensive approach to implement additional actions...to protect U.S. national security and foreign policy interests."

The White House, Applied Materials, KLA and Lam did not immediately respond to CNBC's comment requests.

—Fred Imbert

Piper Sandler upgraded struggling Carvana shares to overweight from neutral, saying the stock is too cheap for investors to ignore.

"We know that rising interest rates are a risk, and we know that bankruptcy is a real possibility. But CVNA is now 1/10th as valuable as it was 12 months ago, and after running a detailed sensitivity analysis, we think many realistic scenarios suggest that CVNA is grossly undervalued," analyst Alexander Potter said in a note.

Carvana shares popped 7% in the premarket.

CNBC Pro subscribers can read the full story here.

—Sarah Min, Fred Imbert

The euro jumped to a three-week high against the U.S. dollar early on Monday after hawkish messaging from the European Central Bank on monetary policy tightening.

The common currency was up 1.3% against the greenback shortly after 9 a.m. London time, changing hands for around $1.017.

Sterling also advanced, and was last seen trading up 0.8% against the dollar at $1.168.

The weaker dollar may have been helping U.S. futures on Monday as the greenback's march to the highest in decades vs. a basket of currencies recently has weighed on share prices. A strong dollar erodes the value of revenue for U.S. multinationals.

- Elliot Smith

European stocks advanced on Monday, following a positive trend set at the end of last week and overnight in Asia-Pacific markets.

The pan-European Stoxx 600 climbed 0.9% in early trade, with retail stocks adding 2.7% to lead gains as almost all sectors and major bourses entered positive territory. Health care stocks fell 0.3%.

European stocks took heart last week from the hawkish tone struck by the European Central Bank on monetary policy. Policymakers opted for a record hike to interest rates as they try to rein in record high inflation in the 19-member euro zone. The momentum for stocks and the euro continued on Monday.

- Elliot Smith

The probability of the U.S. Federal Reserve hiking interest rates by another 75 basis points at its September meeting moved to 90%, according to the CME Group's FedWatch tracker of fed funds futures bets.

That's up from last week's 82% probability for a three-quarter point hike.

The chance for a 50-basis-point hike now stands at 10%, FedWatch showed.

–Jihye Lee

The British pound has slid against the U.S. dollar over the past year, hitting a 37-year low against the greenback last week — and it could weaken even further, according to analysts.

DZ Bank's Sonja Marten warned that GBP/USD is a currency pair that tends toward large swings, and gave a pretty bearish forecast.

Pro subscribers can read more here.

— Zavier Ong

The U.S. Department of Commerce plans to publish new regulations related to restricting exports of chipmaking equipment to Chinese factories that produce advanced semiconductors, Reuters reported, citing people familiar with the matter.

The rules will be based on letters sent to KLA, Lam Research and Applied Materials earlier this year, when they were informed that government-issued licenses would be needed to sell such equipment to buyers that make chips with sub-14 nanometer processes.

The new regulations would likely include additional actions against China, sources told Reuters, adding they could be changed and published later than expected.

—Jihye Lee

As fears over the global energy supply came back into focus last week, Goldman highlighted six oil and gas themes which it said looked attractive into the year end.

The investment bank sees total returns of 15% for large-cap stocks under its oil and gas coverage and names six themes to watch into the year end.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Oil prices were lower Sunday after energy markets whiplashed last week. Prices have been weighed down by rising interest rates and the potential curbed demand due to Covid lockdowns in China.

West Texas Intermediate fell 0.29% to $86.54 a barrel. Brent crude dipped 0.17% to $$92.68 a barrel.

Last week, oil prices rose slightly when Russia's Vladimir Putin threatened to halt oil and gas exports to Europe if price caps are imposed. In addition, a small cut to OPEC+ oil output plans also supported prices.

Still, oil prices fell on the week.

—Carmen Reinicke

Stock futures rose Sunday night as Wall Street looked to continue last week's rally ahead of a key inflation report set to be released Tuesday.

Dow Jones Industrial Average futures rose 91 points, or 0.29%. S&P 500 and Nasdaq 100 futures climbed 0.32% and 0.41%, respectively.

—Carmen Reinicke