U.S. stock indexes continued Tuesday’s big rally after slowing producer prices supported views that the Fed is ending interest rate hikes, while Target shares rose on optimistic holiday quarter forecasts.
The target rose 14.2% before the bell as the major retailer forecast fourth-quarter profit largely above Wall Street expectations as supply chain costs eased.
The benchmark S&P 500 and tech-heavy Nasdaq posted their biggest daily percentage gains in more than six months on Tuesday as weaker-than-expected consumer price data raised hopes that U.S. interest rates have peaked.
Data released Wednesday showed producer prices eased more than expected and U.S. retail sales fell in October, albeit by less than expected.
Figures showed retail sales fell by 0.1 per cent last month. Economists polled by Reuters had predicted a decline of 0.3 percent.
“Given the strong consumer (which is no surprise given the employment picture) it is reasonable to assume corporate profits will continue to rise, and this will only add fuel to the fire for a year-end rally,” Chris Zaccarelli said. Chief investment officer of Independent Advisor Alliance.
Wall St rebounds as falling inflation raises bets on peak interest rate
“Inflation is returning for now and the economy continues to grow at a strong pace for now, so the only sensible direction for stocks is higher.”
Money market investors have fully priced in the possibility that the U.S. central bank will keep interest rates steady in December, according to CME Group’s Fedwatch tool. They also see the first rate cut of the cycle starting in May 2024.
In addition, US President Joe Biden and Chinese leader Xi Jinping will meet for the first time in a year on Wednesday and will focus on talks that could ease the friction between the hostile superpowers on military conflicts, drug trafficking and artificial intelligence.
At 8:51 a.m. ET, Dow e-minis were up 84 points, or 0.24%; S&P 500 e-minis were up 15.75 points, or 0.35%, and Nasdaq 100 e-minis were up 83.5 points, or 0.53%.
Further strengthening this sentiment, the US House of Representatives, with broad support from lawmakers in both parties, passed a temporary spending bill that would prevent a government shutdown.
To avoid a shutdown, the Senate and the Republican-controlled House must enact legislation that Biden can sign before current funding for federal agencies expires at midnight Friday.
Among other stocks, TJX shares fell 2.4% after the discount clothing chain cut its fourth-quarter profit forecast.
U.S.-listed shares of Chinese e-commerce firm JD.com rose 7.5% after the company posted a jump in profits as supply chain challenges eased.
Sirius XM rose 13.3% after Warren Buffett’s Berkshire Hathaway took a stake in the audio entertainment company.
news source (www.brecorder.com)