- Dow, S&P and Nasdaq higher after FOMC minutes
- Producer price inflation data stronger-than-expected
- Exxon seals $59.5 billion deal for Pioneer
4:13pm: Markets rebound in the afternoon
The Dow closed Wednesday up 66 points, 0.2%, at 33,805, the Nasdaq Composite improved 97 points, 0.7%, to 13,660 and the S&P 500 added 19 points, 0.4%, to 4,377. The small-cap Russell 2000 index slid 5 points, 0.3%, to 1,771.
The S&P 500 manages its fourth-straight winning session.
The indexes dipped below the flatline earlier in the session, but investors responded well to minutes from the FOMC's September meeting released Wednesday afternoon. The majority of Fed officials indicated that another interest rate increase is likely, the minutes showed.
“A majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate, while some judged it likely that no further increases would be warranted,” the minutes stated.
Shares of Exxon Mobil Corporation declined 3.6% Wednesday after the company confirmed its acquisition of Pioneer Natural Resources (NYSE:PXD) (Pioneer Natural Resources (NYSE:PXD)) in a $59.5 billion deal.
12:00pm: Stocks off highs ahead of FOMC minutes
US stocks were mostly higher, although off earlier best levels, slightly unsettled by strong wholesale prices inflation figures ahead of the release of the minutes of the last FOMC meeting.
At midday the Dow Jones Industrial Average was little changed at 33,735.16. the S&P 500 was up 3.81 points, 0.1%, at 4,362.05 and the Nasdaq was up 49.04 points, 0.4%, at 13,611.89.
Matthew Martin, US economist at Oxford Economics said "higher energy prices took their toll on the producer price index and have propelled the headline measure to a 4.8% annualized gain for Q3, after a 1.3% annualized decline in Q2. "
He expects prices to slow enough over the coming quarters to keep additional rate hikes off the table but said it "will put more weight on the CPI release tomorrow."
Morgan Stanley (NYSE:MS) fell 1.6% as UBS downgraded to neutral from buy.
9:40am: Stocks shrug off strong PPI figures
US stocks opened higher, shrugging off stronger-than-expected wholesale price inflation data, as bond yields continued to ease.
Shortly after the opening bell, the Dow Jones Industrial Average was up 106.73 points, 0.3%, at 33,846.03, the S&P 500 was up 18.77 points, 0.4%, at 4,377.01 while the Nasdaq Composite jumped 95.67 points, 0.7%, at 13,658.52.
Data from the US Bureau of Labor Statistics showed the producer price index rose 2.2% in September from a year before, rising from a 2.0% annual increase in August. Markets had been expecting the inflation rate cool to 1.6%.
Month-on-month, the PPI rose 0.5% in September, slowing from a 0.7% rise in August. The monthly PPI inflation print had been expected to be 0.4%.
Ian Shepherdson at Pantheon Macroeconomics said: "The headline was boosted by a 0.9% increase in food prices and a 3.3% jump in energy prices, neither of which is likely to be repeated this month; the recent drop in gasoline prices alone will subtract about 0.4% from the October headline."
Ryan Brandham, head of global capital markets, North America, at Validus Risk Management said the data was "a reminder that the last mile of the fight against inflation is going to be a tough one."
"CPI data tomorrow will be key, but the Fed may not be simply able to maintain higher for longer if they want to bring inflation all the way back to the 2% target."
"They may need to hike further and risk damage to the economy," he said.
The 10-year Treasury yield declined even after the strong data, hitting its lowest level since September 29, down 5 basis points to 4.59%.
Exxon Mobil Corp fell 3.6% after it agreed to buy Pioneer Natural Resources (NYSE:PXD) Co for $59.5 billion.
7:00am: Exxon seals $59.5 billion Pioneer deal
US stock futures pushed higher on Wednesday ahead of wholesale price inflation figures and as the market digests confirmation of Exxon's swoop for Pioneer Natural Resources (NYSE:PXD).
In pre-market trading, futures for the Dow Jones Industrial Average were 0.2% higher, while those for the S&P 500 rose 0.2%, and contracts for the Nasdaq 100 futures were up 0.3%.
ExxonMobil has agreed to buy Pioneer Natural Resources in a $59.5 billion deal that is set to unleash a wave of consolidation in the US shale oil industry.
The biggest western oil supermajor said it had sealed an all-stock deal which values Pioneer at $253-a-share.
The combination hands Exxon a dominant position in the Permian Basin, the vast field in western Texas and New Mexico that has helped turn the US into the world’s largest oil and gas producer.
Exxon said together, the companies will have an estimated 16 billion barrels of oil equivalent resource in the Permian.
"Combining Pioneer’s differentiated Permian inventory and basin knowledge with ExxonMobil’s proprietary technologies, financial resources, and industry-leading project development is expected to generate double-digit returns by recovering more resource, more efficiently and with a lower environmental impact," Exxon said in a statement.
Aside from Exxon, the focus before trading starts will be US producer prices which are expected to have increased by 0.3% in September after advancing 0.7% in August.
US producer prices are expected to have increased by 0.3% in September after advancing 0.7% in August.
The reading comes ahead of consumer prices figures on Thursday as investors continue to speculate as to the future path of interest rates.
On Tuesday, Federal Reserve Bank of Atlanta President Raphael Bostic reiterated that he doesn’t think policymakers need to raise interest rates any further and that policy is restrictive enough to bring inflation back to their 2% goal.
"I think that our policy rate is at a sufficiently restrictive position to get inflation down to 2%," Bostic said at the annual convention for the American Bankers Association.
"I actually don’t think we need to increase rates anymore," he added.
Bostic’s comments come ahead of the release of the minutes of the last FOMC meeting later in the session at which the Fed indicated one more rate rise would happen this year.
The rise in bond yields appears to have led some officials to conclude this may no longer ne necessary but tonight’s minutes may provide some further clues.