Stocks waver on uncertain rate outlook

Concerns about further interest rate hikes weighed on stock markets Monday even as data pointed to economic fragility in the United States and Europe -- but Wall Street eked out gains to start the week.

Investors were spooked Friday by US jobs data that showed moderate hiring but further wage increases, underscoring persistent inflation pressures.

Many have been betting the Federal Reserve is near the end of its monetary tightening cycle as it seeks to engineer a "soft landing" for the world's largest economy -- a strategy also being pursued by the European Central Bank.

This refers to an outcome where inflation comes down on the back of interest rate hikes, without triggering a major recession.

But Fed governor Michelle Bowman doused those hopes in a speech on Saturday, saying "consistent evidence" was needed that price increases are slowing.

"I also expect that additional rate increases will likely be needed to get inflation on a path down to the FOMC's two percent target," she said, referring to the policy-setting Federal Open Market Committee.

Higher rates would increase the risk of broader economic slowdowns on both sides of the Atlantic.

Bowman's comments underscored "the growing uncertainty that is not only starting to permeate central bank thinking but also investor sentiment more broadly", said Michael Hewson, chief market analyst at CMC Markets.

As a result, investors are likely to take a wait-and-see stance ahead of US consumer price data due on Thursday.

For now, all three major US indices advanced to end the day, with the Dow gaining 1.2 percent and the broad-based S&P 500 climbing 0.9 percent.

The tech-focused Nasdaq rose 0.6 percent, although it was initially pulled off of opening gains. Apple shares lost 1.7 percent after the company warned of further revenue declines, while Tesla also stumbled on news that its longtime chief financial officer was leaving.

"Traders are punishing a couple of the most highly-weighted 'Big Tech' behemoths like Apple and Tesla," said Matthew Weller, research chief at StoneX, noting a "mixed" second-quarter earnings season for US companies overall.

European markets closed little changed, tracking Wall Street's weakness on Friday and a mixed showing in Asia amid signs of further economic headwinds.

Germany's industrial output plunged in June, official figures showed, with the economy ministry warning of a gloomy outlook as high energy prices and interest rates continued to take their toll in Europe's biggest economy.

In Britain, average UK property prices fell 0.3 percent in July from June, major mortgage provider Halifax said, as homeowners struggle with surging borrowing costs.

"Early economic data has done little to help lift the outlook for growth in Europe," said Joshua Mahony, chief market analyst at Scope Markets.

Elsewhere Monday, oil prices fell after a pre-weekend rally, in part reflecting supply concerns after a Russian oil tanker in the Black Sea was struck by Ukrainian drones.

The Black Sea strikes increase geopolitical risks, according to analysts at DNB, noting the "significant volumes" of both crude oil and refined fuels transported via the Black Sea.

New York - Dow: UP 1.2 percent at 35,473.13 (close)

New York - S&P 500: UP 0.9 percent at 4,518.44 (close)

New York - Nasdaq: UP 0.6 percent at 13,994.40 (close)

London - FTSE 100: DOWN 0.1 percent at 7,554.49 points (close)

Frankfurt - DAX: FLAT at 15,950.76 (close)

Paris - CAC 40: UP 0.1 percent at 7,319.76 (close)

EURO STOXX 50: UP 0.1 percent at 4,337.50 (close)

Tokyo - Nikkei 225: UP 0.2 percent at 32,254.56 (close)

Hong Kong - Hang Seng Index: FLAT at 19,537.92 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,268.83 (close)

Euro/dollar: DOWN at $1.1006 from $1.1012 on Friday

Pound/dollar: UP at $1.2783 from $1.2748

Euro/pound: DOWN at 86.07 from 86.35 pence

West Texas Intermediate: DOWN 1.1 percent at $81.94 per barrel

Brent North Sea crude: DOWN 1.0 percent at $85.34 per barrel