The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to add to yesterday’s modest gains.
Ongoing optimism about the outlook for interest rates may contribute to early strength on Wall Street despite conflicting remarks by Federal Reserve officials.
While Fed Governor Christopher Waller said Tuesday he is “increasingly confident that policy is currently well positioned,” Fed Governor Michelle W. Bowman said she expects further rate hikes will be needed.
Traders seem to be focusing more on the comments that reinforce expectations the Fed will leave policy unchanged until cutting rates beginning in mid-2024.
Positive sentiment may also be generated in reaction to a surge by shares of General Motors (GM), with the auto giant spiking by 9.3 percent in pre-market trading after announcing $10 billion stock buyback and increasing its dividend.
Stocks fluctuated over the course of the trading session on Tuesday before eventually ending the day modestly higher. With the uptick on the day, the Dow reached its best closing level in well over three months.
The major averages finished the day well off their highs of the session but still in positive territory. The Dow crept up 83.51 points or 0.2 percent to 35,416.98, the Nasdaq rose 40.73 points or 0.3 percent to 14,281.76 and the S&P 500 inched up 4.46 points or 0.1 percent to 4,554.89.
Stocks moved to the upside in morning trading on the heels of Waller’s remarks adding to recent optimism the Fed is done raising interest rates.
Speaking at an American Enterprise Institute event, Waller said he is “increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2 percent.”
Waller warned that he cannot say for sure whether the Fed has done enough to achieve price stability but expressed hope incoming economic data will help answer that question.
However, the buying interest generated by Waller’s remarks was partly offset by the conflicting comments from Bowman.
Bowman said during a Utah Bankers Association and Salt Lake Chamber breakfast that she continues to expect the Fed will need to increase rates further to keep policy sufficiently restrictive to bring inflation down to 2 percent in a timely way.
Overall trading activity remained subdued, however, with traders reluctant to make significant moves ahead of the release of several key economic reports in the coming days.
On Thursday, the Commerce Department is due to release its report on personal income and spending in the month of October.
The report includes readings on inflation said to be preferred by the Fed and could impact the outlook for interest rates.
The uptick by the Dow was partly due to a strong gain by shares of Boeing (BA), with the aerospace giant jumping by 1.4 percent to its best closing level in well over two months.
Boeing moved higher after RBC Capital Markets upgraded its rating on the Dow component’s stock to Outperform from Sector Perform.
Gold stocks extended the rally seen during Monday’s session, driving the NYSE Arca Gold Bugs Index up by 4.5 percent to a nearly four-month closing high.
The rally by gold stocks came amid a sharp increase by the price of the precious metal, with gold for December delivery surging $27.60 to $2,040 ounce.
Significant strength also emerged among airline stocks, as reflected by the 1.3 percent gain posted by the NYSE Arca Airline Index. The index reached its best closing level in two months.
On the other hand, brokerage stocks showed a notable move to the downside, dragging the NYSE Arca Broker/Dealer Index down by 1.2 percent.