Following the substantial rally seen in the previous session, stocks saw some further upside during trading on Wednesday. The major averages fluctuated over the course of the session but managed to end the day modestly higher.
The Nasdaq inched up 9.45 points or 0.1 percent to a three-month closing high of 14,103.84, and the S&P 500 edged up 7.18 points or 0.2 percent to a two-month closing high of 4.502.88.
The narrower Dow outperformed, climbing 163.51 points or 0.5 percent to 3,499.21, the blue chip index’s best closing level in three months.
The continued strength on Wall Street came as the latest inflation data added to optimism about the outlook for interest rates.
Before the start of trading, the Labor Department released a report 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 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 saw further upside after skyrocketing in the previous session, driving the NYSE Arca Airline Index up by 2.9 percent to its best closing level in well over a month.
Significant strength was also visible among banking stocks, with the KBW Bank Index climbing by 1.4 percent to a two-month closing high.
On the other hand, oil service stocks moved sharply lower along with the price of crude oil, dragging the Philadelphia Oil Service Index down by 1.4 percent.
Pharmaceutical stocks also saw notable weakness on the day, resulting in a 1.0 percent drop by the NYSE Arca Pharmaceutical Index.
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 also moved to the upside on the day. While the German DAX Index advanced by 0.9 percent, the U.K.’s FTSE 100 Index climbed by 0.6 percent and the French CAC 40 Index rose by 0.3 percent.
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.
Looking Ahead
Another batch of U.S. economic data is scheduled to be released on Thursday, including reports on weekly jobless claims, import and export prices, industrial production and homebuilder confidence.
On the earnings front, retail giant Walmart (WMT) is among the companies due to report their quarterly results before the start of trading on Thursday.
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