Dow climbs as rate cut moves closer

Stocks opened higher on Monday, with just a little over a week to go until a highly anticipated interest rate cut by the Federal Reserve.

The Dow opened a modest 0.1%, or 32 points, higher. The S&P 500 climbed 0.2%, and the Nasdaq Composite was 0.3% higher in early trade.

President Donald Trump, who has long criticized the Fed for its monetary policy, again tweeted his displeasure on Monday.

In a follow-up tweet, Trump added that GDP and wealth accumulation in the United States could be much higher than it is.

Meanwhile, consensus expectations for the Fed to cut rates by a quarter percentage point still outweigh those for a half-point cut.

Fed Funds futures price in “nearly three cuts this year but seems way too dovish in light of firm US retail sales and jobs data,” wrote Win Thin, global head of currency strategy at Brown Brothers Harriman. “The manufacturing sector remains a concern, but even that seems to be recovering in July,”

There are a few US economic data points coming before the Fed’s interest rate decision next Wednesday: home sales, trade data, jobless claims and most importantly second quarter GDP growth. The consensus estimate is 1.8% growth between April and June, according to Refinitiv.

Elsewhere, oil prices remain elevated amid escalating tensions in the Middle East. US oil prices are 0.9% higher at $56.11 a barrel, while Brent crude, the international benchmark, is 0.9% higher at $63.03 a barrel.

Last week Iran seized two tankers, one British-flagged and one British-operated, in the Persian Gulf. Any further deterioration of the situation in the region should push oil prices higher.