Stocks rose Wednesday as investors shook off inflation data that got here in higher than expected and looked ahead to a key consumer report that may inform the pace of the Federal Reserve’s rate hikes going forward.
The Dow Jones Industrial Average gained 169 points, or 0.58%. The S&P 500 rose 0.28%, bolstered by a ten% jump in shares of Moderna, the highest gaining stock within the index. The Nasdaq Composite ticked up 0.12%.
Stocks whiplashed between gains and losses earlier within the morning when the September producer price index, a gauge of final-demand wholesale prices, got here in higher than expected. The print was up 0.4% in September, greater than the consensus estimate of a 0.2% increase, in response to Dow Jones.
The PPI number is considered one of the inflation gauges investors are watching alongside the Federal Reserve. If inflation stays high, the central bank is more prone to proceed its aggressive path of rate of interest hikes to bring it back into check. Which means rates will proceed to rise and will stay high for longer than markets expect, weighing on stocks.
Investors will get more inflation data on Thursday, when the September consumer price index report is released. The CPI number is a measure of price changes in a basket of common consumer goods and services.
“Prices remain elevated so it should not be a surprise to see producer goods and services rise. Take into accout the rise remains to be below what we were seeing consistently month after month earlier this yr,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. “Little doubt the Fed still has its work cut out for them, and if tomorrow’s CPI read is hot, do not be surprised to see some investors come to grips with how long the road to tamer inflation could also be.”
The minutes from the Federal Reserve’s September meeting will even be released Wednesday. While Fed Chairman Jerome Powell has acknowledged that aggressive rate of interest increases might be painful, the central bank will proceed to charge forward in its fight to lower inflation.