US STOCKS-U.S. stocks extend rally; investors bet Fed will pause rate hikes

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12/06/2023 19:44

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      Fed expected to hold rates this week 
    

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      Consumer prices data for May due on Tuesday
    

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      Nasdaq Inc slides on Adenza buyout deal 
    

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      Indexes: S&P 500 +0.48%, Nasdaq +1.01%, Dow +0.19%
    

  
 (Updated at 1420 ET (1820 GMT)
    By Shristi  Achar A and Noel Randewich
       June 12 (Reuters) - 
    U.S. stocks rallied on Monday, putting the S&P 500 within
striking distance of its highest close since April 2022, and
Oracle hit a record high ahead of quarterly results as investors
awaited inflation data and the Federal Reserve's interest rate
decision this week. 
        Lifted by gains in market heavyweights including
increases of about 2% in both Amazon  AMZN.O  and Tesla
 TSLA.O , the S&P 500 has now recovered over 20% from its
October 2022 lows. Some investors say Wall Street is the midst
of a bull market.
        "The further out the October lows get in the rear view
mirror, the more confident investors become. Have investors
become more complacent? They probably have, and that's actually
a good sign," said Jake Dollarhide, chief executive officer of
Longbow Asset Management in Tulsa, Oklahoma.
  
        The S&P 500 was up 0.48% at 4,319.38 points. A close at
that level would mark the benchmark's highest close since April
21, 2022.
  
        The Nasdaq jumped 1.01% to 13,392.99 points, while the
Dow Jones Industrial Average was up 0.19% at 33,940.17 points.
  
    
    The U.S. Labor Department's consumer price index reading on
Tuesday is expected to show inflation cooled slightly in May,
with core prices likely remaining sticky. Tuesday is also first
day of the Fed's two-day meeting.     
    Traders see a 76% chance of the central bank holding rates
at the 5%-5.25% range on Wednesday, while pricing in a 71%
chance of a rate hike in July, according to the CME Fedwatch
tool. 
    "There's a chance that the Fed will stay data dependent. So
we don't necessarily think that a rate hike is off the table in
the future, but for the near term we just see them staying
steady," said Dylan Kremer, co-chief investment officer of
Certuity.  
    A rally in megacap stocks, better-than-expected quarterly
earnings and hopes that the Fed might be nearing the end of its
monetary tightening cycle have lifted indexes in recent weeks. 
    The rally has recently widened to include more economically
sensitive sectors such as energy and industrials, as well as
small-cap stocks, as data continues to show a resilient U.S.
economy despite higher interest rates.
    Goldman Sachs on Friday raised its year-end price target for
the benchmark S&P 500  .SPX  to 4,500 from 4,000, citing the
broadening of the market rally.
    The CBOE volatility index  .VIX  edged up to 14.51, its
highest since last Tuesday.
    Oracle  ORCL.N  jumped as much as 7% to an all-time high
after J.P. Morgan hiked its price target ahead of the cloud and
enterprise software firm's fourth-quarter results later in the
day. 
        Of the 11 S&P 500 sector indexes, six rose, led by
information technology  .SPLRCT , up 1.4%, followed by a 1.36%
gain in consumer discretionary  .SPLRCD .
  
    Nasdaq Inc  NDAQ.O  slumped 11% after the exchange operator
said it would buy software firm Adenza for $10.5 billion, which
analysts called an expensive bet.
    Biogen  BIIB.O  rose 1.3% after a U.S. FDA panel of advisers
unanimously backed its Alzheimer's drug, Leqembi, raising
expectations that a traditional approval for the treatment might
not come with major new safety warnings.
    Broadcom Inc  AVGO.O  jumped 5.8% after Reuters reported 
the chipmaker was set to gain conditional EU antitrust approval
for its $61 billion proposed acquisition of cloud computing firm
VMware  VMW.N . That helped lift the Philadelphia semiconductor
index  .SOX  2.9%, bringing its gain in 2023 to 43%.
        Advancing issues outnumbered falling ones within the S&P
500  .AD.SPX  by a 1.3-to-one ratio.
  
        The S&P 500 posted 17 new highs and 3 new lows; the
Nasdaq recorded 93 new highs and 61 new lows.
  

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 (Reporting by Shristi Achar A and Sruthi Shankar in Bengaluru
and by Noel Randewich in Oakland, Calif.
Editing by Vinay Dwivedi, Sriraj Kalluvila and David Gregorio)
 ((noel.randewich@tr.com; Twitter: @randewich))