4.10pm: US markets buoyant ahead of key inflation numbers
US markets pushed higher into the close as investors took the view that tomorrow’s inflation figures would show a slowdown in the pricing pressures that have forced the Federal Reserve to hike interest rates.
At the close The Dow Jones Industrial Average rose 268 points, or 0.8%, to 33,972, the S&P 500 advanced 50 points, or 1.28%, to 3,970, and the Nasdaq Composite jumped 189 points, or 1.76%, to 10,932.
Economists expect the CPI to show prices cooled by a modest 0.1% in December from the prior month leaving annual growth of 6.5% while core inflation (excluding food and energy prices) is seen 0.3% higher in December than the prior month and 5.7% higher than a year ago.
“It’s really all today about kind of positioning ahead of head of CPI,” said Daniel Eye, chief investment officer at Fort Pitt Capital Group. “You’re trying to get in there ahead of a big, big move on the report tomorrow.”
Stocks on the move included GE Healthcare Technologies, which rose 8.3% after forecasting continued revenue growth in 2023, while Pool Corp, the swimming pool construction company added 5% after Deutsche Bank upgraded it to buy from hold.
12.05pm: Nasdaq has its sights set on four straight days of gains
US stocks rose in noon trading as investors eye Thursday’s Consumer Price Index (CPI) numbers for December, with a 6.5% year-over-year increase expected by economic surveyed by Bloomberg, down from 7.1% in November.
At midday, the Dow gained 91 points to 33,795, while the S&P 500 added 23 points at 3,942 and the tech-heavy Nasdaq climbed 103 points to 10,846.
“As we get closer to the end of this interest rate hike campaign that the Fed is doing, tech stocks should rally,” Bolvin Wealth Management Group president Gina Bolvin said.
“Let’s just face it: Last year they got creamed, so there are investors that want to pick up some bargains,” Bolvin added.
Notable movers included shares of Tesla Inc, which gained nearly 4% after the company registered with the state of Texas to expand its electric vehicle factory in Austin this year. In addition, Goldman Sachs named the stock a top pick for 2023.
9.40am: Rosy glasses on
US stocks edged higher at the open on Wednesday as investors chose to proceed with optimism despite signs that the Fed’s aggressive interest rate hikes to tame inflation may not be over.
Swissquote Bank senior analyst Ipek Ozkardeskaya said investors had chosen to keep their rosy glasses on.
“The market is fighting back the Fed,” Ozkardeskaya said. “The Fed says ‘we will hike the rates above 5%’, and investors reply ‘we don’t believe you; we think that you will not raise the rates above 5%!’”
“As a result, the financial conditions in the US are now neutral, while inflation, though easing, remains more than three times higher than the Fed’s 2% target. This means that the Fed will continue hiking rates even if it means slower economic growth.”
Just after the market opened, the Dow Jones Industrial Average had added 120 points or 0.4% at 33,824 points, the S&P 500 was up 20 points or 0.5% at 3,939 points, and the Nasdaq Composite had gained 55 points or 0.5% at 10,798 points.
In terms of major movers, meme stock Bed, Bath & Beyond Inc added 24.2% as the embattled retailer teeters on the edge of bankruptcy, while Party City Holdco Inc gained 22.2% on reports that the party goods store has sought funding for a potential Chapter 11 bankruptcy.
6.30am: December's CPI report in focus
Wall Street is expected to open up as traders turn their attention to key inflation data due on Thursday after Federal Reserve Chair Jerome Powell provided no clues on any change to the central bank's monetary policy.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.1% in Wednesday pre-market trading, while those for the broader S&P 500 index gained 0.2% and contracts for the Nasdaq-100 added 0.1%.
Markets enjoyed a positive session on Tuesday as investors took heart from Powell’s speech at a banking conference Sweden, which steered clear of rhetoric on interest rates and inflation. His comments came a day after a number of Fed officials repeated that interest rates would reach at least 5% this year.
At the close the DJIA was up 0.6% at 33,704, the S&P 500 rose 0.7% to 3,919 and the Nasdaq Composite advanced 1%, to 10,743.
“This week’s US CPI report is now the next focus for markets in the tug of war currently playing out between the market, which thinks the Fed will have to cut rates this year, and Fed officials who insist nothing even close to that will happen,” said Michael Hewson, chief market analyst at CMC Markets UK.
“Fed chair Jay Powell’s comments yesterday did little to indicate whether the FOMC was inclined to take another step down in its rate hiking cycle when it next meets at the end of the month.”
"Nonetheless the lack of hawkish comment from chair Powell yesterday gave US markets the perfect reason to stop trending lower as we saw a modest rebound into the close, led by the Nasdaq, although rather perversely bond yields also edged higher," Hewson added.
Thursday's CPI release is expected to reveal inflation eased further in December, with the headline rate forecast to show annual growth of 6.5% from 7.1% a month earlier. Core CPI, which excludes volatile energy and food prices, may have slowed to 5.7% from 6%.