PARIS (Reuters) – The New York Stock Exchange opened higher on Monday, extending last week’s improvement against a backdrop of appetite for risky assets following in particular strong corporate publications.

The weak gains, however, signal some caution as investors await key U.S. inflation figures this week to gauge the pace of the expected decline in interest rates this year.

In early trading, the Dow Jones index gained 94.35 points, or 0.24%, to 39,607.19 points and the broader Standard & Poor’s 500 rose 0.23% to 5,235.14 points.

The Nasdaq Composite takes 0.36%, or 58.85 points, to 16,399.72.

The S&P 500 and the Nasdaq Composite recorded their third consecutive week of gains on Friday, a first since January, while the Dow posted its best weekly performance since mid-December.

American stock indices have thus returned close to their historic peaks reached in March, boosted by quarterly corporate results above expectations.

Of the 459 S&P 500 companies that have reported earnings so far, 77.3% have beaten analysts’ profit estimates, compared to a long-term average of 66.7%, according to LSEG data.

Stocks also benefited from signs of a slowing labor market that fueled bets on one or two rate cuts from the U.S. Federal Reserve (Fed) this year.

Investors will learn on Tuesday and Wednesday the monthly indicators of producer prices (PPI) and consumer prices (CPI) respectively, while an intervention by Jerome Powell, the president of the Fed, is planned between these two statistics.

“Not only are corporate earnings better than expected, but their outlook has also been improved,” notes Thomas Hayes, president of Great Hill Capital.

“The market likes this, but also needs reassurance that inflation is not going to rise (…) which could allow the Fed to allow itself at least one or perhaps two cuts interest rate before the end of the year,” he adds.

Traders currently expect the Fed to cut rates by 42 basis points by the end of the year, according to LSEG data. The first drop in borrowing costs is anticipated for September with a probability of 63%.

On the bond market, the yield on ten-year Treasuries fell by more than four basis points, to 4.4669%.

In terms of values, Alphabet lost 1.65% while OpenAI, the creator of ChatGPT, is due to present this Monday an internet search engine service based on artificial intelligence (AI), in order to compete with Google Search. Microsoft, which supports the start-up, gains 0.23%.

Arm Holdings advances 3.14%, the subsidiary of the Japanese conglomerate SoftBank plans to develop chips intended for artificial intelligence (AI), according to the Nikkei Asia newspaper.

(Written by Claude Chendjou, with Sruthi Shankar and Shristi Achar in Bangalore, edited by Blandine Hénault)

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