Wall St. buoyed by inflation, Fed by Reuters

NEW YORK (Reuters) – U.S. stock indexes rallied to start the trading week on Monday, boosted in part by gains in Microsoft and Microsoft Corp. Pfizer (NYSE: ), as investors braced for inflation data on Tuesday and a Federal Reserve policy announcement later in the week.

Microsoft Corp (NASDAQ: ) rose 2.89% following an agreement to buy a 4% stake in the technology company. London Stock Exchange Group (LON:), helps increase each of the three main indexes.

After strong gains in October and November, the benchmark stumbled out of the gate in December, suffering its biggest weekly percentage decline in nearly three months as mixed economic data helped fuel recession concerns.

Consumer inflation data will be closely watched on Tuesday, with prices expected to rise 7.3% year-on-year in November, down from a 7.7% rise in the previous month, while a “core” measure excluding food and energy is expected to rise 6.1% from 6.3% in the previous month.

“The market is pricing in a 6-handle tomorrow in CPI, which is the expected 7.3%, and if it holds a 6-handle, that should be enough to cheer everyone up, at least short-term,” said Ken Polgari, managing partner at Case Capital Advisors in Boca Raton, Florida.

“The other thing is that they’re expecting Jay Powell to come out again and have a bad tone, which would be a big mistake. Jay Powell needs to soften them up or they need to stop acting sad.”

The S&P 500 gained 56.18 points, or 1.43%, to 3,990.56 and added 139.12 points, or 1.26%, to 71,143.

The rally marked the biggest one-day percentage gain for each of the three major indexes since Nov. 30, and each of the 11 major S&P sectors ended the session positive.

Shares of Pfizer rose 0.85% after the drugmaker provided revenue forecasts for vaccines across its portfolio.

The cooler-than-expected inflation report will help support optimism about the central bank’s aggressive policy measures this year to slow the economy. The central bank is widely expected to hike by 50 basis points on Wednesday, which would be a step down from the 75 basis points it has raised in the past four meetings.

Stocks were weaker on Friday as producer prices for November came in higher than expected, although the trend moderated.

Fears that the central bank could make a policy mistake and push the economy into recession have weighed heavily on Wall Street this year, with the S&P 500 down about 16% and on track for its first annual decline since 2018 and the biggest percentage decline since 2008.

Rivian Automotive Inc fell 6.16% after the company suspended its partnership discussions with Mercedes-Benz Vans to produce an electric van in Europe.

Biotech company Horizon Therapeutics (NASDAQ: ) Plc rose 15.49% following a buy offer from the company. Amgen Inc (NASDAQ: ), while Coupa Software (NASDAQ: ) Inc rose 26.67% after agreeing to sell to private equity firm Thoma Bravo LLC.

Weber Inc soared 23.23% after controlling shareholder BDT Capital Partners LLC agreed to take the outdoor cooking company private.

Volume in US equities was 10.35 billion shares compared to the full session’s average of 10.49 billion over the past 20 trading days.

Advancing issues outnumber declining issues on the NYSE by a ratio of 1.67-to-1; On the Nasdaq, the ratio was 1.43-to-1 in favor of the advancers.

S&P 500 hits 2 new 52-week highs and 2 new lows; The Nasdaq Composite posted 73 new highs and 264 new lows.