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Wall Street jumps on more evidence of cooling inflation

The tech-heavy Nasdaq led Wall Street’s main indexes higher on Tuesday as data providing further proof of cooling inflation boosted bets of smaller interest rate hikes by the Federal Reserve.


The Labour Department’s producer prices index rose 8 per cent in the 12 months through October, lower than an estimated 8.3 per cent rise, according to a Reuters poll of economists.


Excluding volatile food and energy costs, the index rose 5.4 per cent on an annual basis last month after increasing 5.6 per cent in September.


The report follows softer-than-expected consumer prices data late last week, which sparked a massive rally on hopes of a less aggressive monetary policy.


“It (the data) is going to confirm people’s hopes that inflation is starting to turn the corner. It’s going to give the market more confidence,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.


Traders increased their bets on a 50-basis point increase in rates by the Fed at its December meeting to 85.4 per cent from 80.6 per cent before the data was released, according to CME Fedwatch tool.


As US Treasury yields fell, shares of megacap tech and other growth stocks such as Apple, Amazon.com and Alphabet rose between 2 per cent and 4 per cent.


Shares of Walmart jumped 6.6 per cent after raising its full-year net sales expectations, with the upbeat outlook boosting shares of other big retailers such as Target Corp and Macy’s Inc. The S&P 500 retail and consumer discretionary sectors were up more than 2 per cent each.


US-listed shares of Chinese firms including JD.Com, Alibaba Group Holding rose between 7 per cent and 10 per cent after President Joe Biden and Chinese leader Xi Jinping’s meeting on Monday where they pledged more frequent communications.


A clutch of other economic data including on retail sales and housing starts this week as well as comments by several Fed officials will also be parsed by investors as they try to gauge the path of future rate hikes.


At 09:50 am local time, the Dow Jones Industrial Average was up 302.33 points, or 0.90 per cent, at 33,839.03, the S&P 500 was up 55.39 points, or 1.40 per cent, at 4,012.64, and the Nasdaq Composite was up 227.15 points, or 2.03 per cent, at 11,423.37.


US-listed shares of Taiwan Semiconductor Manufacturing jumped 11.0 per cent after Warren Buffett’s Berkshire Hathaway bought more than $4.1 billion of stock in the company.


Shares of Tencent Music Entertainment Corp listed in the US jumped 16 per cent after the Chinese music-streaming firm surpassed third-quarter results estimates.


Netflix jumped 2.8 per cent as BofA Global Research reinstated coverage on the streaming giant with “buy”.


Advancing issues outnumbered decliners by a 5.70-to-1 ratio on the NYSE and by a 3.43-to-1 ratio on the Nasdaq.


The S&P index recorded no new 52-week highs and no new lows, while the Nasdaq recorded 23 new highs and 27 new lows.


he S&P 500 information technology sector .SPLRCT was down 1.2% and among the leading sectoral decliners on the benchmark index.


Tesla Inc TSLA.O fell 3.4% as Chief Executive Elon Musk said “I have too much work on my plate” when asked about his recent acquisition of Twitter and his leadership of the electric-vehicle maker.


Chinese leader Xi Jinping and U.S. President Joe Biden met on Monday for long-awaited talks that come as relations between their countries are at their lowest in decades, marred by disagreements over a host of issues from Taiwan to trade.


Among other stocks, Biogen Inc BIIB.O and Eli Lilly LLY.N gained 3.4% and 1.4%, respectively, after the failure of Swiss rival Roche’s ROG.S Alzheimer’s disease drug candidate.


Theater operator AMC Entertainment AMC.O jumped 6.5% as Marvel’s latest film “Black Panther: Wakanda Forever” grossed $330 million globally in its opening weekend, while Hasbro Inc HAS.O fell 7.4% after BofA Global Research downgraded the toymaker’s stock.


Declining issues outnumbered advancers for a 2.08-to-1 ratio on the NYSE and a 1.65-to-1 ratio on the Nasdaq.


The S&P index recorded four new 52-week highs and no new low, while the Nasdaq recorded 23 new highs and 21 new lows.


U.S.-listed shares of Chinese companies rose, with Alibaba Group Holding Ltd BABA.N gaining 1.4% after China eased some of its strict COVID-19 rules.


Advancing issues outnumbered falling ones within the S&P 500 .AD.SPX by a 1.7-to-one ratio.


The S&PCore services prices rose 0.5%. Away from rents and other services, goods disinflation is broadening.


Prices of used cars and trucks plunged 2.4%. The cost of apparel declined for the second straight month as retailers offered discounts to move unwanted inventory.


There were also decreases in prices of furniture and bedding as well as appliances. As a result, core goods prices fell 0.4% after being unchanged in September, a function of slowing demand and recovering fractured global supply chains.


Airline fares declined 1.1%. Healthcare costs fell 0.5% as the government incorporated updated data used to estimate health insurance prices.


“The BLS methodology measuring health insurance prices has provided upward price pressure the last twelve months but should now give downward pressure the next year,” said Will Compernolle, a senior economist at FHN Financial in New York.

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