S&P 500 closes at highest level since April 2022 as traders hope the Fed will skip a rate hike: Live updates

Stocks closed higher on Monday as investors added to optimism that the central bank could skip a rate hike at their policy meeting this week.

The S&P 500 added 0.93% to close at 4,338.93, while the Nasdaq Composite popped 1.53% to finish the day at 13,461.92. The Dow Jones Industrial Average climbed 189.55 points, or 0.56%, to close at 34,066.33.

Investors will also look toward fresh inflation data this week, with the consumer price index for May due out Tuesday.

— Brian Evans

Technology stocks connected to artificial intelligence have surged this as enthusiasm for these tools gains steam. But Needham sees five specific big technology names as the biggest winners in the race.

Analyst Laura Martin highlighted Alphabet, Microsoft, Amazon, Apple and Meta Platforms as the top beneficiaries given their size, scope, and financial prowess, enabling them build and maintain AI models, and harness the talent.

Among theses names, the three biggest cloud providers stand to "win most and fastest," Martin said. She expects these brands to have lower costs and higher revenues as other companies pay steep fees to access their models.

"Also, Cloud services get much more sticky after a business builds an app on their [foundation models]," she said.

— Samantha Subin

It's a relatively quiet day on Wall Street as investors look to the Federal Reserve meeting set for the middle of the week.

Just over 31.5 million shares of the SPDR S&P 500 ETF Trust, a tracker of the broad S&P 500 index, have exchanged hands as of 2 p.m. ET with just two hours left in the trading day. In an average full day over the last 30 sessions, about 80.6 million shares were traded.

That low volume underscores the typical calm-before-the-storm period seen early in weeks with a Fed meeting on the docket. Investors will watch Wednesday's announcement and press conference for any changes to the path of interest rate hikes and commentary from Fed Chair Jerome Powell around the state of the economy and future monetary policy.

Before that, consumer price index data due Tuesday will also be watched given its connection to inflation.

— Alex Harring

Billionaire investor Ray Dalio believes artificial intelligence could be transformative but it could also inflict harm if it's not used appropriately.

"It's going to be fabulous ... and dangerous," Dalio said on CNBC's "Squawk on the Street." "The only issue is the power. It's the people and how the how the technology is used as the risk.... It can either produce a tremendous amount of productivity.... Or it can be used in this war in various ways to hurt each other."

The founder of Bridgewater, one of the world's largest hedge funds, said the effective users of AI, or companies that use AI to enhance their productivity, will make very attractive investments.

"I don't care if it's in biology, hospitals, I don't care if it's in agriculture, there will be those who want to stand it and know how to make the most of it. And there will be those who will be slow to make the most of them and those that are able to make the most of them will be the disruptive companies," Dalio said.

— Yun Li

Brazil's Petrobras was upgraded to overweight from neutral at JPMorgan on Monday, attracting its second upgrade in less than a week after Morgan Stanley made a similar move last Wednesday. JPMorgan raised its yearend 2023 price target on the oil stock's ADRs by 35% to $15.50 from $11.50 previously, representing almost 13% upside to Friday's close.

"Petrobras remains as an undervalued stock generating substantial" free cash flow, wrote analysts led by Rodolfo Angele. The stock sells for 2.5x EV/EBITDA based on 2023 estimates with a free cash flow yield of 27%, while global oil majors sell for 4.8x and 14%, respectively.

JPMorgan said it spent the past week visiting institutional investors with Petrobras management, which said that capital spending "will increase into low carbon initiatives" at the same time as the "key focus" stays on exploration and production, and that "dividends may eventually be lower, but should remain paid on a quarterly basis and in line with oil majors with the addition of buybacks as well."

— Scott Schnipper

Tailwinds from improvements in delivery could be restricted by increases in competition for electric vehicle maker Nio, according to Nomura.

Analyst Frank Fan initiated coverage of the China-based vehicle maker's stock at neutral. His $7.50 price target implies U.S.-listed shares will slide about 3% in the next year from where they finished Friday's session.

"We believe the company is on track to improve deliveries in 2H23F," Fan said in a note to clients Sunday, also calling first-quarter deliveries "lackluster." "That said, we expect NIO's implied upside to be capped by intensified competition and limited market share improvement in 2023F, based on the company's 2023 guidance for deliveries vs. the overall growth outlook for the EV industry."

Fan's price target implies further downside for the stock, which has already dropped more than 14% this year.

On Monday, the company cut prices and ended free battery swaps for new buyers despite management saying earlier this year that the company would not enter the electric vehicle "price war." U.S. shares were up more than 7% in Monday's session.

— Alex Harring

Cruise stocks rose across the board on Monday after JPMorgan Chase upgraded Carnival to an overweight rating as cruising momentum grows.

Carnival surged more than 13%, while Royal Caribbean and Norwegian Cruise Line Holdings added 2.1% and 8%, respectively.

— Samantha Subin

With the debt ceiling deal signed and in place, the Treasury Department will issue a huge rollout of T-bills to refill its coffers – and that could put bank deposits under pressure, Morgan Stanley said.

The bank's fixed income team is calling for $1.364 trillion of net T-bill issuance over the rest of 2023, with $1 trillion of that amount issued over the next four months. "Our fixed income team sees most of this initial [Treasury General Account] restocking to come from bank reserves, suggesting ~$450b of gross outflows over the next four months," wrote analyst Betsy Graseck in a Monday note.

She added that this is a "counter-consensus call" as the firm's fixed income team anticipates that money market funds are unlikely to be major buyers of T-bills.

In turn, slowing deposits could hamper bank stocks' recent recovery. "A re-acceleration of deposit outflows would end the current intra-quarter bank stock bounce," Graseck added.

-Darla Mercado

The impact of rising rates may not be over for US Bancorp, with deposit betas — or the share of higher rates that are passed on to customers — potentially moving upward again, according to Citi.

"We see potential for betas to come in the mid- to high 40s range, coupled with our lower-than-consensus outlook on deposit balances due to QT, we believe 2H NII pressures will lead to a downward revision or miss" on net interest margin and revenue guidance, analyst Keith Horowitz wrote.

Citi opened a negative catalyst watch on US Bancorp, and cut its price target on the stock to $33 per share from $39. Citi still has a neutral rating on the stock.

— Jesse Pound

Despite the software company's recent share price surge, JPMorgan is getting more bullish on Oracle ahead of earnings.

The stock's run up puts a dent in the discounted valuation underpinning much of JPMorgan's recent investment thesis, but analyst Mark Murphy said that the "narrative and perception may continue to tilt positively as long as OCI continues to grow comfortably faster than the hyperscaler aggregation."

Given this setup, what the Wall Street firm views as an improving growth profile, and the sector's re-rating, Murphy lifted his price target on shares to $109, reflecting little upside from Friday's close. Shares have surged more than 43% so far this year.

"Overall, we believe Oracle's resilient, sticky, and largely recurring revenue stream positions the company well to relatively outperform in a post-pandemic environment," he said. "We are encouraged by the underlying organic recurring revenue and backlog growth trend and believe the cloud shift continues to progress"

— Samantha Subin

Excitement around artificial intelligence has lifted popular technology stocks this year, while also heightening some fears that AI may be the next bubble to pop.

Amid this backdrop, Piper Sandler highlighted some of its top sector picks here.

— Samantha Subin

The bear may have not yet bid farewell from the stock market, according to Morgan Stanley strategist Mike Wilson.

Wilson, who has been cheered for his smart predictions in 2022's volatile market, said investors have become more bullish on the market. But he said there may be more bearishness to come, pointing to the firm's poor expectations for 2023 earnings as a reason for pause.

"With the S&P 500 rally now crossing the 20% threshold, more are declaring the bear market officially over," he said in a note to clients Monday. "We respectfully disagree due to our 2023 earnings forecast. Ironically, a Fed pause may awaken the bear tactically just as liquidity headwinds ramp up."

CNBC Pro subscribers can read more about the strategist's take here.

— Alex Harring

Bernstein analyst Aneesha Sherman upgraded Adidas to outperform from market perform, citing a potential sales boost from soccer superstar Lionel Messi's move to the U.S.' Major League Soccer club, Inter Miami.

"This week's announcement that Lionel Messi will join David Beckham-owned Inter Miami puts two Adidas-sponsored soccer giants in the spotlight in the US," Sherman wrote. "US soccer is gaining steam, with more high schoolers than ever choosing to play the sport and 8% of Americans calling soccer their favorite sport to watch, up from <2% in the 2000's and catching up to basketball (12%) and baseball (11%)."

The analyst hiked her price target to Adidas' U.S.-listed shares to $112.32 per share from $91.63. The new target implies upside of 30% from Friday's close.

— Fred Imbert, Michael Bloom

Bank of America analyst Mariana Perez Mora on Monday hiked her price target on Palantir Technologies, saying the data analytics firm has one clear advantage in the generative AI arms race.

While most firms ramping up their AI efforts have to clear regulatory and legal hurdles, Palantir already has considerable experience working with the government.

"In the generative AI Arms Race, Palantir comes out on top," the analyst said, adding, "We think Palantir (ticker: PLTR) is positioned to be one of the dominate providers in generative AI by providing a near term solution, agnostic to a preferred LLM (large language model), compliant to tight security, data privacy and regulatory requirements, with demonstrated use cases across sectors."

The analyst hiked her price target to $18 from $13, implying 19% upside from Friday's close of $15.02 per share. Palantir shares were higher by 3% during midday trading on Monday.

— Sarah Min

Evercore ISI upgraded AutoZone to outperform from in line on Monday, saying it sees the stock's 6% decline since its May 23 earnings report as an attractive entry point. The Wall Street firm also raised its price target to $2,700 from $2,640, suggesting more than 14% upside from Friday's close.

AutoZone should see high single-digit growth in its do-it-for-me segment, analyst Greg Melich wrote.

"We don't think that AZO needs double digit commercial growth to work, rather a high single digit increase should be enough to drive same store sales around 3% with margins recovering following several years of price investment," he said.

Shares of AutoZone were up nearly 2% in morning trading.

— Michelle Fox

Shares for cruise company Carnival were up nearly 10% Monday following an upgrade from JPMorgan to overweight from neutral.

"CCL has an opportunity to drive improved brand clarity and pricing power with increased investment in advertising (vs. historical underinvestment vs peers) and given a smaller capacity growth profile, this provides a faster pathway for management to focus on de-levering the balance sheet," analyst Matthew Boss wrote.

CNBC Pro subscribers can read more about the upgrade here.

— Hakyung Kim

Stocks were higher on Monday ahead of inflation data Tuesday and the next central bank meeting on Wednesday.

The Dow Jones Industrial Average added 102 points or 2%, while the S&P 500 gained 2%. The Nasdaq Composite climbed 0.4%.

Traders are hoping that the Federal Reserve will decide to skip a rate hike in June, with the forthcoming consumer price index report expected support the decision.

— Brian Evans

Oracle shares were up 4.2% Monday during premarket trading. The company is scheduled to post earnings after the bell.

Ahead of the company's quarterly results, Wolfe Research raised its rating on shares to outperform from peer perform. The firm's new price target of $130 implies shares rallying 18.3% from where they closed on Friday. 

"Our entire call is based on increased confidence and conviction that [Oracle Cloud Infrastructure] will become the engine that accelerates top- and bottom-line growth for the company over the next three years," Zukin wrote in a Sunday note. 

"Driven by architectural cost advantages, intelligent partnerships, and an early mover advantage in GenAI, we see OCI doubling market share (2% to 5%) by CY25," said Zukin. 

CNBC Pro subscribers can read more about his upgrade here.

— Hakyung Kim

These are some of the stocks making the biggest moves before the bell:

• Nasdaq — The exchange operator's shares dropped 7.7% following the announcement of its deal to buy Adenza, a software firm owned by Thoma Bravo. The $10.5-billion deal would be Nasdaq's largest acquisition as the company sharpens its focus on financial technology and attempts to diversify.
• Illumina — The biotech stock rose 2% in premarket trading after Illumina announced a CEO transition plan on Sunday. CEO Francis deSouza resigned, effective immediately, but will stay on as an advisor through July 31. The move follows pressure from activist investor Carl Icahn.
• Oracle — The IT stock added 4.7% in the premarket as investors awaited earnings for the fiscal fourth quarter expected after the bell.

See the full list here.

— Alex Harring

Adam Crisafulli of Vital Knowledge said there's been a psychological shift in the market's mindset given its recent rally.

"The magnitude of the recent equity rise is too large to ignore for most and there is now a chase underway from both money managers and strategists (there have already been a number of S&P 500 price target increases, and more such moves are likely in the coming days)," Crisafulli said.

The S&P 500 is up nearly 12% year to date. Last week, it traded above 4,300 for the first time since August.

— Fred Imbert, Michael Bloom

Despite recent execution blunders that have sent SentinelOne shares plunging by more than 35% over the past 12 months, Morgan Stanley thinks the market is now mispricing the cybersecurity company.

Analyst Hamza Fodderwala upgraded shares to overweight from equal weight. He also increased his price target to $20 from $15, implying 37.4% upside from Friday's close. 

The bank said SentinelOne has inherent value as a "long-term share gainer" with the potential for meaningful margin upside.

CNBC Pro subscribers can read more about his upgrade here.

— Hakyung Kim

UBS shares rose 1.1% after the Swiss bank said it had completed the takeover of its former domestic rival Credit Suisse.

The deal was hastily arranged in March, facilitated by regulators, amid concerns that severe losses at Credit Suisse would destabilize the banking system.

The Swiss government has agreed to cover losses of up to 9 billion Swiss francs ($10 billion) beyond an initial 5 billion Swiss francs UBS must shoulder as part of the deal, as it absorbs the more risk-heavy business.

UBS said Monday it expected "significant" restructuring charges and Credit Suisse operating losses to be offset by reductions in risk-weighted assets.

— Jenni Reid

European stock markets opened higher Monday, with the regional Stoxx 600 index up 0.4% at 8:10 a.m. London time.

Household goods led gains with a 1% uptick, as mining and oil and gas shares both traded around 0.8% lower.

Germany's DAX and France's CAC 40 were both 0.8% higher as investors await the European Central Bank's monetary policy meeting Thursday, while the U.K.'s commodity-heavy FTSE 100 was up 0.15%.

— Jenni Reid

People's Bank of China governor Yi Gang said that he expects China's second quarter gross domestic product to be "relatively high" thanks to a low base effect.

Yi, in a speech delivered in Shanghai last week, said that recent soft inflation prints reflect a delayed rise in demand levels and that he expects the consumer price index to pick up gradually in the second half of the year.

He reiterated his confidence in the economy reaching the government-set full-year growth target of about 5%.

Separately, China's Securities Daily cited economists expecting the central bank to take monetary easing measures by cutting the medium-term lending facility rate by 5 to 10 basis points on Thursday. The economists added there would be room for the reserve requirement ratio in the third quarter of this year.

— Jihye Lee

The Bank of Japan is likely to maintain its ultra-easy monetary policy when it meets later this week, Reuters reported.

Citing unnamed sources, Reuters reported that the BOJ may also "signal that inflation is overshooting its forecasts." This may lead to the central bank upgrading its inflation view in July when it does a quarterly review.

However, the sources also told Reuters that an upgrade in its inflation view, should it happen, is "unlikely to automatically trigger an interest rate hike."

Previously, BOJ Governor Kazuo Ueda maintained his stance that an ultra-loose policy is needed until wages grow sustainably along with inflation.

— Lim Hui Jie

Japan's wholesale prices rose 5.1% in May from the previous year, slightly lower than the 5.8% recorded in April.

The increase in the producer price index was the slowest rate in since July 2021, and lower than estimates from economists polled by Reuters that forecast a rise of 5.5%.

On a month-on-month basis, wholesale prices fell by 0.7%, sharply lower than the 0.2% expected by Reuters.

— Lim Hui Jie

Global central bank meetings will be under the spotlight this week, including the U.S. Federal Reserve, the Bank of Japan as well as the European Central Bank.

On Monday, Japan's producer price index and China's new yuan loans are scheduled to be released. Indonesia's consumer confidence, Malaysia's retail sales and India's industrial production and inflation rates will be published as well.

Indonesia will publish its retail sales for the month of April on Tuesday. The U.S. consumer price index for May will be released as the Federal Open Market Committee (FOMC) takes place on the 13 to the 14th.

South Korea's import and export prices for May will be out on Wednesday alongside its unemployment rate. China reports its foreign direct investment for the month of May. New Zealand is scheduled to release its first quarter current account print.

A slew of economic data from China will be released on Thursday, including its industrial production, retail sales, unemployment rate and home prices for the month of May.

New Zealand will publish its gross domestic product for the first quarter of this year also on Thursday, as Japan's balance of trade for May and its machinery orders for April will be released on the same day as its central bank's meeting will kick off. The Eurozone Central Bank will announce its latest interest rate decision overnight.

On Friday, Singapore's non-oil domestic exports for May will be published and the Bank of Japan will conclude its central bank meeting.

— Jihye Lee

The majority opinion on Wall Street is next week's Federal Reserve policy meeting will bring no formal action, and a lot of stern talk about a commitment to bring down inflation further leaves open the option to resume raising rates at the central bank's July meeting.

The betting is also that the latest inflation reading for May that will be reported Tuesday, just as the two-day Fed meeting gets underway, will show additional progress in the fight against higher prices.

Read the full story on what to expect this week here.

— Scott Schnipper

U.S. stock futures were flat Sunday night.

Dow Jones Industrial Average futures fell by 11 points, or 0.03%. S&P 500 futures climbed by 0.02%, while Nasdaq 100 futures rose 0.01%.

— Sarah Min