Here are five main things It could affect trading on Tuesday.
CATCHUP PLAYING IRS: The Department of Internal Revenue Refunds are being sent to more than 1 million Americans who filed their taxes late in the early days of the COVID-19 pandemic — but time is running out for taxpayers to raise money.
Approximately 1.6 million applicants will automatically receive refunds or credits with a collective value of $1.2 billion — an average of $750 per person.
There are only a few weeks left to qualify for relief. In order to get the money, Americans need a file Individual tax returns by September 30, 2022.
The IRS typically charges individuals who file a return late without extending the non-filing penalty – an additional 5% per month on the unpaid amount, which can add up to 25% of the tax due. But the tax collection agency waives those fees for many individuals and businesses who filed 2019 and 2020 returns late.
“The commutation issued today is another way the agency is supporting people during this unprecedented time,” IRS Commissioner Chuck Rettig said in a statement last month. “Penalty will be commuted automatically to eligible persons or companies; there is no need to contact.”
The IRS said eligible tax returns include individuals, corporations, real estate and trusts. People who have been fined but have not yet paid the fine will see it eliminated, while individuals who have already paid the late fee will receive a refund or credit.
The agency said the majority of the refunds will be issued by the end of September.
The announcement comes as the IRS continues to work its way through a backlog of unprocessed tax returns. As of August 12, the IRS had 9.3 million unprocessed individual tax returns from 2022, including about 7.6 million paper returns.
Unmanufactured returns stack originated from pandemic-related disorders, Including a shortage of workers, the daunting task of managing millions of stimulus checks, and adjusting to other tax changes in various COVID-19 relief packages, such as the Enhanced Child Tax Credit payments.
Inflation expectations fall again: Consumer expectations for Where will inflation be One year from now it is down again in August, according to a major New York Federal Reserve survey published on Monday, a potentially reassuring signal for the US central bank as it tries to cool high prices.
The median expectation is that the inflation rate will rise 5.7% one year from now, down significantly from the 6.2% recorded in June, according to the New York Federal Reserve’s survey of consumer expectations. Three years from now, consumers see inflation slowing down slightly to 2.8% – down from 3.2% recorded last month.
Consumers expect prices to fall further over the next five years, and they expect the inflation rate to hover around 2% in 2027.
The survey stated that “uncertainty about medium-term inflation – or uncertainty expressed about future inflation outcomes – declined in the short-term and unchanged on the medium-term horizon”.
The report is based on a rotating board of 1,300 households.
The survey plays an important role in determining how federal policy makers will respond to the inflation crisis. This is because actual inflation depends, at least in part, on what consumers think. It’s a self-fulfilling prophecy – if everyone expects prices to rise by 3% in a year, this indicates companies that can increase prices by at least 3%. Workers, in turn, will want to increase their salaries by 3% to offset higher costs.
A sharper-than-expected increase in inflation expectations in May prompted Federal Reserve officials to agree to the first 75 basis point rate hike since 1994 amid concerns that higher rates are becoming entrenched.
Explaining the Fed’s decision during a post-meeting press conference, President Jerome Powell He said policy makers were looking for evidence that monthly inflation is flattening or beginning to decline. With consumer prices rising frequently and inflation expectations rising unexpectedly, he said, officials decided that “strong measures are warranted.”
“One of the factors in our decision to go forward with 75 basis points today is what we saw in the inflation expectations,” Powell told reporters during a press conference after the meeting. “We are absolutely determined to hold it steady at 2%. That was one of the reasons – the other was just the CPI reading.”
CPI Report Due: at 8:30 a.m. ET, Bureau of Labor Statistics It is expected to say the Consumer Price Index fell 0.1% m/m in August, after remaining unchanged in July.
On a yearly basis, we expect prices to rise 8.1% in August, falling back from the cooler-than-expected July reading of 8.5% (the estimate was 8.7%) and 9.1% in June, the highest inflation in almost 41. years (since November 1981).
The cooler pace of CPI growth, along with smaller-than-expected increases in July PCE indices three weeks ago, would reinforce the view that inflation has peaked.
After accounting for volatile food and energy costs, core CPI is expected to rise 0.3% in August, matching the increase in July.
Annually, core CPI is expected to rise 6.1% in August. This would interrupt a 4-month streak of flat or decelerating growth after the 6.5% sharp rise in March, the highest level in nearly 40 years (since August 1982).
US Markets Rising: US stocks rose on Mondayahead of key inflation data that is expected to show a further slowdown in consumer prices.
The S&P 500 rose 43.05 points, or 1.1%, to 4110.41 after closing higher for the week on Friday. The Dow Jones Industrial Average added 229.63, or 0.7%, to 3,2381.34. The tech-heavy Nasdaq Composite Index rose 154.10, or 1.3%, to 12,266.41.
The three indices recorded the fourth consecutive trading day of progress. Indices have been rising steadily in recent sessions as concerns about large rate hikes eased. Falling commodity prices raised hopes that the worst of inflation had passed.
Meanwhile, the labor market remained a major source of economic power. Measures of business activity were stronger than expected.
|ribbon||protection||else||they change||they change %|
|Me: DJI||Dow Jones averages||32381.34||+229.63||+ 0.71%|
|SP500||Standard & Poor’s 500||4110.41||+43.05||+ 1.06%|
|I: COMP||Nasdaq Composite Index||12266.410582||+154.10||+ 1.27%|
“The biggest mover in the markets right now is investor optimism that inflation is coming down,” said Michael Aaron, senior investment analyst for the US ETF business at State Street Global Advisors. “We are in that period where earnings season is over, and it has become the biggest story of the year: the Federal Reserve and what the ultimate target federal funds rate is.”
US consumer price inflation data will help Fed officials gauge how far their battle against rising prices has come and how far they may need to raise interest rates. Federal Reserve officials hold a meeting on the interest rate next week.
“If inflation moderates faster than expected, I think the Fed could feel more comfortable because its job may be closer to completion than originally thought,” said Stephanie Lange, chief investment officer at Homerich Berg.
She added that inflation has likely peaked, but markets are unlikely to push much higher until the Fed begins easing its tightening campaign.
“What the market is priced right now is a soft landing, and I think it’s very optimistic,” she said.
Despite some signs of slowing inflation, investors largely expect Federal Reserve officials to continue tightening for a few months to ensure that price pressures ease. Many investors expect the Fed to raise interest rates by another 0.75 percentage points next week.
Stocks in the news: Bristol-Myers Squibb stock jumped $2.20, or 3.1%, to $72.36 after the U.S. Food and Drug Administration approved the drug maker’s psoriasis treatment, Sotyktu.
Gilead Sciences earned $2.73, or 4.2 percent, to $68.01 after the company said it had settled a patent case related to HIV treatments.
|ribbon||protection||else||they change||they change %|
|BMY||Bristol-Myers Squibb Company.||72.36||+2.20||+ 3.14%|
|Moh / lacquer||Gilead Sciences Corporation||68.01||+2.73||+ 4.18%|
Meanwhile, Twitter fell 78 cents, or 1.8%, to $41.41 after the company’s lawyers said Twitter intended to force its purchase. Agreement with Elon Musk.
Musk’s legal team on Friday cited the whistleblower’s payment as a new reason to drop the takeover.