The stock market closed higher on expectations that inflation rates will drop ahead of news from the Fed on rate hikes this week. Energy, technology and the utilities sectors led advances. Software stocks gained as Box topped a buy point after an upgrade.
The Nasdaq composite rose 1.3% while the S&P 500 gained 1.4%. The Dow Jones Industrial Average gained 1.6%. The small-cap Russell 2000 index gained 1.2%.
Volume fell on the NYSE and the Nasdaq vs. the same time on Friday, early data showed.
The Innovator IBD 50 ETF gained 2%, lifted partly by gains in Box and energy stocks.
The yield on the benchmark 10-year Treasury note rose two basis points to 3.61%.
Crude oil rose 3.4% to $73.45 per barrel.
Stock Market Rises On Expectations Of Lower Inflation
The last rate hike of the year is expected Wednesday and will follow Tuesday's consumer price index numbers for November. Investors will be watching not just this month's rate hike but also news from Fed Chairman Jerome Powell to see how much rate hikes will continue going up next year.
Econoday economists estimate November's annual inflation rate will decline to 7.3% from 7.7% in October.
The CME FedWatch Tool shows a 74.7% chance of a 50-basis-point hike, bringing the rate up to the 4.25% to 4.5% zone. Also this week is the November retail sales and Purchasing Managers Index. Friday is a quadruple witching, when multiple options and futures expire.
LPL Financial pointed out that December often starts slow but historically has been a strong month. "There are also some potentially supportive seasonal patterns ahead, such as the Santa Claus Rally, the outlook for January following down years, and the third year of the presidential cycle," wrote Adam Turnquist, LPL's chief technical strategist, and Barry Gilbert, asset allocation strategist, in a memo to investors on Monday.
Tesla fell more than 6% to near its 52-week low. Tesla China sales, including exports, hit a record in November following recent Shanghai capacity increases. But Tesla is offering a fresh China price discount amid increasing reports that it plans to slash or even suspend Shanghai output.
Tesla stock has fallen on those signs of weak demand.
Apple stock gained 1.6% and Microsoft rose 2.9% on Monday, as technology stocks advanced.
The S&P Technology Select Sector ETF rose 2.2% Monday, behind the Energy Sector ETF, which gained 2.6%, and the S&P Utilities Sector ETF, which rose 2.3%.
Stock Market Movers And Shakers
Molina Healthcare is in a deep cup base with a buy point of 374.10. On Monday it jumped past its 50-day line as health care stocks rallied.
Health care-related plays, including MOH, continue to hold up as they tend to be more insulated from inflationary pressures. The stock ranks No. 1 among IBD's managed care stocks group, ahead of market leader in terms of size UnitedHealth, according to IBD Stock Checkup.
UnitedHealth, meanwhile, is rapidly approaching a flat base's 558.20 buy point, according to IBD MarketSmith chart analysis. Shares rose 1.2% Monday and are about 2% away from the latest buy point. UnitedHealth — the nation's largest managed-care provider — was a recent IBD 50 Stocks To Watch pick. Earnings grew a healthy 28% year over year in the third quarter.
Catalyst Pharmaceuticals soared 6.3% Monday and is trading back above a cup-with-handle entry of 16.76. The 50-day line is rising, while Catalyst Pharma is finding support around its 21-day line.
Local TV stations owner Nextstar Media is in a double-bottom base and seems to be forming a handle now, with a 191.52 buy point. Nexstar Media topped earnings estimates on Nov. 8 in reporting 87% EPS growth last quarter. Revenue increased 10%, though its sales came up just short of analyst estimates. Its RS Rating leapt to 82 from 53 just a month ago. The company earns the No. 1 rank among its peers in the Media-Radio/TV industry group.
Dow Jones Leaders Rise, Form Bases
JPMorgan Chase upgraded Box from neutral to overweight, with a new price target at 34. The document sharing provider is on the IBD 50 list. Shares gained 7.4% Monday and are breaking out past the 29.57 buy point of a cup-with-handle base.
Dow Jones component Caterpillar is building a handle in a cup base after a breakout at 238. Shares offer an alternate buy point at 239.95.
Google parent Alphabet reversed higher Monday and ended a six-day losing streak, closing up 0.5%
Allegro MicroSystems is in a buy zone. It broke out on strong volume from a cup-with-handle base with a buy point of 32.07.
Software company Coupa surged over 26% on news that Thoma Bravo is acquiring the company for $8 billion.
Dow Jones health care leader Amgen has agreed to buy Horizon Therapeutics for over $27.8 billion, implying an enterprise value for Horizon of about $28.3 billion. HZNP rose more than 15%, near all-time highs. Amgen shares fell 0.7%.
Lam Research rose 3.1% after Deutsche Bank upgraded the chip equipment maker to a buy rating with a price target of 520. The stock appears to be forming a base.
Follow Michael Molinski on Twitter @IMmolinski
