Wall Street advances on hopes of moderation in rate hikes

US stocks closed higher on Monday, extending last week’s gains, as signs of economic weakness suggested the effects of the Fed intended to cool the economy – and thus curb inflation – are beginning to take root.

The three main stock indices of Wall Street gained momentum during the first session of a week packed with high-profile corporate earnings and crucial economic data.

A report of S&P Global showed a contraction in business this month, offering an indication that the barrage of sharp interest rate hikes by the Federal Reserve (Fed) is having the desired effect, raising hopes that the central bank could start to slow the pace of rate increases.

“It’s a sign that the economy is slowing down and what the Fed is doing is working,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The Dow Jones Industrial Average rose 417.06 points, or 1.34%, to 31,499.62 units, while the S&P 500 it gained 44.59 points, or 1.19%, to 3,797.34. The Nasdaq Composite lost 92.89 points, or 0.86%, to 10,952.61 units

Among the 11 main sectors of the S&P 500health care added the greatest percentage advance.

Shares of Tesla Inc fell after the electric car maker slashed prices for its Model 3 y ModelY by as much as 9% in China, indicating a decline in demand in the world’s largest auto market.

Third quarter earnings season picks up steam this week. Until now, almost a fifth of the companies in the S&P 500 have reported. Of these, 74.7% have obtained results that exceed the consensus, according to Refinitiv data.

Analysts expect earnings growth from S&P 500 3.0%, in aggregate, down from 4.5% at the beginning of the month, according to Refinitiv.

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