Stock market today: Dow ends higher ahead of further earnings, inflation updates

Investing.com -- The Dow closed higher Monday, rebounding from a loss last week as investors looked ahead to further corporate earnings and an update on consumer inflation later this week.

The Dow Jones Industrial Average rose 1.2%, or 407 points, Nasdaq was up 0.61%, and the S&P 500 rose 0.9%.

Google, Meta Rally to offset Apple stumble

Alphabet Inc (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:META) led higher communications services higher, offsetting a fall in Apple Inc (NASDAQ:AAPL) as investors continue to worry about slowing iPhone sales following the latter’s quarterly results last week.

Paramount (NASDAQ:PARA), meanwhile, also pushed the sector higher ahead of its quarterly results due after market close. The media and entertainment company reported an unexpected second-quarter profit as its investment in streaming content continued to attract new subscribers and growth.

Berkshire shines on earnings stage

Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) reported better-than-expected quarterly results, driven by strong performance of its insurance companies, sending its share price more than 3% higher.

“Insurance outperformed with strong underwriting results driven largely by reserve releases and lower than expected catastrophe losses, as well as better than expected net interest income,” UBS said in a note, after lifting its price target on the stock to $621,591 from $608,000.

U.S. Treasury yield curve continues to steepen on soft landing bets

The U.S. yield curve continued to steepen as long-duration Treasury yields added to gains, while shorter-dated yields slipped amid ongoing bets that the U.S. can avoid a recession.

The 2-year Treasury yield curve over the 30-year yield curve, which steepened by 30 basis points last week, marking one of the largest weekly moves in the bond market in over a decade, continued to steepen ahead of an inflation report later this week.

“The recent steepening curve suggests that markets are now priced to perfection and expect a Goldilocks scenario over the next 12 months where gradual Fed cuts in 2024 as disinflation ensues will come to the rescue and guide the economy towards a soft landing,” Oxford Economics said in a note.

Some claim, however, that the recent steepening move has been overdone and stoked by bets of a U.S. debt problem following the fitch downgrade last and the Treasury's plan to sell about $103B Treasury securities next week, which was slightly larger than expected.

Inflation update incoming later this week

Consumer inflation data due Thursday is expected show that price pressures remained steady in July, which would likely support optimism that the Fed may have delivered its final hike last month.

"At the moment, sentiment appears to have swung solidly into the soft landing view, and we would argue a soft landing-plus view, where growth stays robust and price stability is restored," UBS said in a note.