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U.S. Stocks Rebound as Market Backs Off Rate-Hike Bets

By Paul Vigna

Welcome to Evening MoneyBeat, WSJ's closing-bell roundup of all the news and developments in the capital markets. To receive this newsletter, click here: http://on.wsj.com/MoneyBeatEveningSignup

Market Snap at Mon, 29 Aug 2016 16:15:36 -0400 ET

S&P 500 0.52%

↑ 2180.42

DJIA 0.59%

↑ 18503.91

Nasdaq Comp 0.26%

↑ 5232.33

U.S. 10 Year 20/32

↓ 1.566%

Crude Oil -1.41%

↓ $46.97

Gold 0.02%

↑ $1326.20

Yen/Dollar 0.06%

↑ $101.89

Euro/Dollar -0.08%

↓ $1.12

How We Got Here

U.S. stocks rose on Monday, taking back a good chunk of what they'd lost last week, as the market did a rethink of its outlook for potential rate hikes by the Federal Reserve.

The markets are almost literally pinballing around after every Fed speaker. Fed chairwoman Janet Yellen delivered a pretty wide-ranging speech in Jackson Hole, Wyo., on Friday, though she did seem to hint in one place that a rate hike in 2016 was justified. Vice Chairman Stanley Fischer backed that up in an interview later that day. That two-fer drove stocks down on Friday. Those comments, though, were offset by comments on Saturday by the Atlanta Fed's Dennis Lockhart and the St. Louis Fed's James Bullard.

On Monday morning, a key report on inflation, the personal consumption expenditures report, showed that the Fed's so-called preferred guage, the core PCE, was still under the bank's 2% target; at the least, it's a sign that the data-dependent Fed isn't being pressured by the data. To that end, Friday's jobs report will the key bookend to the week's data.

The market's guess now is that there's only about a 21% chance the Fed will raise rates in September, according to the CME's Fedwatch page; that's down from about 33% on Friday after Ms. Yellen spoke. A hike by December has about a 41% chance, down from 44% on Friday.

Elsewhere in the market, amid heavy criticism, EpiPen-maker Mylan said it will launch a generic version of the product that would cost 50% less, and Apple is facing a big tax bill in Europe. The EU's antitrust regulator reportedly will rule that the company's tax arrangements with Ireland breached the bloc's state-aid rules, potentially putting the company on the hook for a tax bill that could range anywhere from $200 million to as much as $19 billion.

Coming Up

Data Front: S&P Case-Shiller HPI (9:00 AM ET), Consumer Confidence (10:00 AM ET).

Earnings: Abercrombie & Fitch, DSW, Fred's, H&R Block,

MoneyBeat Podcast

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First, Liz Hoffman and Corrie Driebusch join Paul Vigna and Stephen Grocer to talk how banking giants like Goldman Sachs and Morgan Stanley are reinventing themselves as a businesses for the middle class. Then Maureen Farrell joins the show to discuss whether an ailing IPO market is finally ready for a rebound.

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Tweet of the Day

So far, today's #markets moves have - broadly but not unanimously - constituted a textbook response to #jacksonhole -- Mohamed El-Erian @elerianm

Today's Video

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A 19-year-old and his friend scaled a skyscraper in Hong Kong and their harrowing feat was captured by a drone.

Number of the Day

1.6%

The price of food at home is down 1.6% on a seasonally unadjusted basis in the 12 months ended in July, according to the BLS, amid the longest stretch of falling prices in more than 50 years.

Must Reads

Mylan to Launch Cheaper Generic EpiPen Alternative: Mylan NV on Monday said it would launch a generic alternative to EpiPen at a 50% discount as the drugmaker continues to react to the criticism from dramatically raising the lifesaving drug's price in recent years.

U.S. Rate Prospects Strengthen Financial Stocks, Dollar: Major U.S. stock indexes had their biggest weekly declines since Brexit after Federal Reserve Chairwoman Janet Yellen said Friday that the case for a rate rise had improved.

EU Set to Rule Apple Tax Deals With Ireland Illegal: The European Union's executive body is poised to rule as soon as Tuesday that Apple Inc.'s tax arrangements with Ireland have breached the bloc's state-aid rules, according to people familiar with the matter.

Fed Officials Say No Thanks to Negative Rates: Federal Reserve officials are turning a cold shoulder to a controversial idea being tried in Japan and much of Europe to boost anemic economies: negative interest rates.

Falling Food Prices Good for Consumers, Bad for Farmers: The U.S. is on track this year to post the longest stretch of falling food prices in more than 50 years, a streak that is cheering U.S. shoppers at the checkout line but putting a financial strain on farmers, grocery stores and restaurants.

Frozen OJ Concentrate Market Disappearing: A once-thriving market for frozen orange-juice concentrate is on the verge of collapse following waning consumer demand, rampant disease in the orchards and now the threat of hurricane season.

Anemic IPO Market Poised for Rebound: A flood of share debuts is expected to invigorate the listless market for initial public offerings after the Labor Day holiday, but the revival might be short-lived.

As Jobs Report Looms, Chartwatchers Debate Stocks' Direction: After the market put in its worst week in almost two months, the landscape that traders are operating in looks different than it did at this time last Monday.