U.S. Stocks Seeing Further Upside Following Latest Inflation Data
Stocks have moved mostly higher during trading on Wednesday, extending the substantial upward move seen in the previous session. The Dow and the S&P 500 have once again set new two-month highs, while the tech-heavy Nasdaq has reached its best intraday level in well over three months.
Currently, the major averages are just off their highs of the session. The Nasdaq is up 79.39 points or 0.6 percent at 14,173.77, the S&P 500 is up 21.44 points or 0.5 percent at 4,517.14 and the Dow is up 128.18 points or 0.4 percent at 34,955.88.
The continued strength on Wall Street comes as the latest inflation data has added to optimism about the outlook for interest rates.
Before the start of trading, the Labor Department released a separate report this morning showing an unexpected decrease in U.S. producer prices in the month of October.
The Labor Department said its producer price index fell by 0.5 percent in October after rising by a revised 0.4 percent in September.
Producer prices were expected to inch up by 0.1 percent compared to the 0.5 percent increase originally reported for the previous month.
The report also said the annual rate of producer price growth slowed to 1.3 percent in October from 2.2 percent in September. Economists had expected the pace of price growth to slow to 1.9 percent.
Following yesterday’s tamer than expected consumer price inflation data, the latest report has reinforced expectations that the Federal Reserve is done raising interest rates.
“The Fed will welcome the reprieve, after producer prices recorded a 4.9% annualized gain in Q3, and coupled with yesterday’s CPI report, it bolsters the case for no further rate increases,” said Matthew Martin, U.S. Economist at Oxford Economics.
Meanwhile, a report released by the Commerce Department showed retail sales in the U.S. edged slightly lower in the month of October.
The Commerce Department said retail sales slipped by 0.1 percent in October after jumping by an upwardly revised 0.9 percent in September.
Economists had expected retail sales to dip by 0.3 percent compared to the 0.7 percent increase originally reported for the previous month.
Excluding a decrease in sales by motor vehicle and parts dealers, retail sales inched up by 0.1 percent in October after climbing by 0.8 percent in September. Ex-auto sales were expected to come in unchanged.
Sector News
Airline stocks are extending the surge seen in the previous session, with the NYSE Arca Airline Index soaring by 5.0 percent to its best intraday level in almost two months.
Continued strength is also visible among banking stocks, as reflected by the 1.6 percent gain being posted by the KBW Bank Index. The index has reached a two-month intraday high.
Networking stocks are also seeing considerable strength on the day, driving the NYSE Arca Networking Index up by 1.5 percent.
Biotechnology, semiconductor and natural gas stocks have also moved notably higher, while some weakness has emerged among pharmaceutical stocks.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved significantly higher during trading on Wednesday. Japan’s Nikkei 225 Index spiked by 2.5 percent, while Hong Kong’s Hang Seng Index skyrocketed by 3.9 percent.
The major European markets are also seeing further upside on the day. While the French CAC 40 Index has climbed by 0.5 percent, the U.K.’s FTSE 100 Index and the German DAX Index are up by 0.8 percent and 0.9 percent, respectively.
In the bond market, treasuries are giving back ground after skyrocketing in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up 9.8 basis points at 4.539 percent.
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