The major U.S. index futures are currently pointing to a sharply higher open on Wednesday, with stocks likely to show a strong move to the upside following the lackluster performance seen in the previous session.
Stocks are likely to benefit from a positive reaction to the Labor Department’s closely watched report on consumer price inflation in the month of December.
While the report showed consumer prices rose by slightly more than expected in December, the annual rate of core consumer price growth unexpectedly slowed.
The Labor Department said its consumer price index climbed by 0.4 percent in December after rising by 0.3 percent in November. Economists had expected consumer prices to rise by another 0.3 percent.
The report also said the annual rate of growth by consumer prices accelerated to 2.9 percent in December from 2.7 percent in November, in line with economist estimates.
Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, edged up by 0.2 percent in December after increasing by 0.3 percent for four straight months. The uptick matched expectations.
The annual rate of growth by core consumer prices slowed to 3.2 percent in December from 3.3 percent in November, while economists had expected yearly growth to remain unchanged.
Positive sentiment is also likely to be generated in reaction to positive earnings news from financial giants JPMorgan Chase (JPM), Goldman Sachs (GS) and Citigroup (C).
JPMorgan Chase, Goldman Sachs and Citigroup are all seeing notable pre-market strength after reporting quarterly earnings that exceeded analyst estimates.
After failing to sustain an early move to the upside, stocks showed a lack of direction over the course of the trading session on Tuesday. The major averages swung back and forth across the unchanged line before eventually closing narrowly mixed.
While the tech-heavy Nasdaq dipped 43.71 points or 0.2 percent to 19,044.39, the S&P 500 inched up 6.69 points or 0.1 percent to 5,842.91 and the Dow climbed 221.16 points or 0.5 percent to 42,518.28.
The initial strength on Wall Street came following the release of a Labor Department report showing producer prices rose by slightly less than expected in the month of December.
The Labor Department said its producer price index for final demand crept up by 0.2 percent in December after climbing by 0.4 percent in November. Economists had expected producer prices to rise by 0.3 percent.
Meanwhile, the report said the annual rate of producer price growth accelerated to 3.3 percent in December from 3.0 percent in November. The acceleration matched economist estimates.
The smaller than expected monthly increase by producer prices helped ease recent concerns about the outlook for inflation and interest rates, although the faster annual growth kept buying interest somewhat subdued.
Traders may also have been reluctant to make more significant moves ahead of the release of the more closely watched report on consumer price inflation.
Gold stocks moved sharply higher on the day, resulting in a 2.8 percent spike by the NYSE Arca Gold Bugs Index. The rally by gold stocks came amid a modest increase by the price of the precious metal.
Substantial strength was also visible among housing stocks, as reflected by the 2.7 percent surge by the Philadelphia Housing Sector Index.
Airline stocks also showed a significant move to the upside, driving the NYSE Arca Airline Index up by 2.4 percent.
Networking, natural gas and banking stocks also saw notable strength, while pharmaceutical stocks showed a considerable move to the downside.
Commodity, Currency Markets
Crude oil futures are climbing $0.66 to $78.16 a barrel after slumping $1.32 to $77.50 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,712.10, up $29.80 compared to the previous session’s close of $2,682.30. On Tuesday, gold inched up $3.70.
On the currency front, the U.S. dollar is trading at 156.34 yen compared to the 157.96 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0335 compared to yesterday’s $1.0308.
Asia
Asian stocks ended little changed on Wednesday after reports emerged that U.S. President-elect Donald Trump’s economic advisers are discussing slowly ramping up tariffs month by month.
Investors also digested soft U.S. producer inflation data and waited for the release of December CPI data later in the day for greater clarity on the path of interest rates over the coming months.
The dollar rally paused, helping oil and gold prices push higher in Asian trading.
China’s Shanghai Composite Index dipped 0.4 percent to 3,227.12 ahead of Chinese 2024 GDP data due later in the week. Hong Kong’s Hang Seng Index rose 0.3 percent to 19,286.07 after a choppy session.
Japanese markets ended little changed and the U.S. dollar dropped to the lower 157-yen range after Bank of Japan Governor Kazuo Ueda said in a speech that the central bank would discuss whether to raise interest rates at its monetary policy meeting next week.
The Nikkei 225 Index finished marginally lower at 38,444.58, extending its losing streak to five days and hitting its lowest level in over a month. The broader Topix Index settled 0.3 percent higher at 2,690.81.
Nintendo shares rallied 2.5 percent amid expectations the video game giant will soon release its much-anticipated Switch 2 console.
Seoul stocks ended little changed, with the Kospi finishing marginally lower at 2,496.81 after impeached President Yoon Suk Yeol was arrested in connection with his failed declaration of martial law last month.
Australian markets dipped slightly ahead of the closely watched U.S. inflation data later in the day. The benchmark S&P/ASX 200 Index slipped 0.2 percent to 8,213.30, dragged down by tech stocks.
Wisetech Global and Infomedia fell 4-5 percent. The broader All Ordinaries Index closed 0.2 percent lower at 8,456.80.
Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index rose 0.5 percent to 12,943.57.
Europe
European stocks have moved mostly higher on Wednesday as bond yields eased after the release of softer-than-expected U.S. producer inflation data.
All eyes now remain on the U.S. CPI data due later in the day that may shed more light on the path of Federal Reserve rates over the coming months.
While the German DAX Index is up by 1.5 percent, the French CAC 40 Index is up by 1.0 percent and the U.K.’s FTSE 100 Index is up by 0.8 percent.
The British pound bounced back after reacting wildly to data showing that U.K. consumer price inflation moderated unexpectedly in December.
The consumer price index registered an annual increase of 2.5 percent in December, weaker than the 2.6 percent rise in November, prompting traders to price in a higher number of BoE interest rate cuts for the year.
Meanwhile, U.K. retailers plan to increase prices this year in response to increased National Insurance costs, according to a survey of Chief Financial Officers conducted by the British Retail Consortium.
Two-thirds of respondents said they will lift prices and around half said they would be reducing number of hours/overtime work.
In other economic news, German wholesale prices rose 0.1 percent year-on-year in December, reversing a 0.6 percent drop in November, data from Destatis revealed earlier today This was the first increase since May 2023.
In corporate news, Hays advanced despite the recruiter reporting another fall in quarterly fees amid an ongoing slowdown in the headhunting market.
Serco has also shown a notable move to the upside after winning a $247 million contract from the U.S. Army.
German wind turbine manufacturer Nordex has also jumped after announcing it significantly increased its order intake last year to 8.34GW, up from 7.36GW in 2023.
U.S. Economic News
Largely reflecting a surge by energy prices, the Labor Department released a report on Wednesday showing consumer prices in the U.S. increased by slightly more than expected in the month of December.
The Labor Department said its consumer price index climbed by 0.4 percent in December after rising by 0.3 percent in November. Economists had expected consumer prices to rise by another 0.3 percent.
The report also said the annual rate of growth by consumer prices accelerated to 2.9 percent in December from 2.7 percent in November, in line with economist estimates.
Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, edged up by 0.2 percent in December after increasing by 0.3 percent for four straight months. The uptick matched expectations.
The annual rate of growth by core consumer prices slowed to 3.2 percent in December from 3.3 percent in November, while economists had expected yearly growth to remain unchanged.
New York manufacturing activity unexpectedly declined in the month of January, according to a report released by the Federal Reserve Bank of New York on Wednesday.
The New York Fed said its general business conditions index slumped to a negative 12.6 in January from a positive 2.1 in December, with a negative reading indicating contraction. Economists had expected the index to inch up to a positive 3.0.
Meanwhile, the New York Fed said firms grew more optimistic conditions would improve in the months ahead, with the index for future business activity jumping to 36.7 in January from 26.9 in December.
At 10 am ET, Minneapolis Federal Reserve President Neel Kashkari is due to deliver welcome remarks and participate in a fireside chat before a virtual Federal Reserve Bank of Minneapolis 2025 Regional Economic Conditions Conference.
The Energy Information Administration is scheduled to release its report on oil inventories in the week ended January 10th at 10:30 am ET. Crude oil inventories are expected to decrease by 1.6 million barrels after falling by 1.0 million barrels in the previous week.
At 11 am ET, New York Federal Reserve President John Williams is due to speak before the Connecticut Business and Industry Association Economic Summit and Outlook 2025.
Chicago Federal Reserve President Austan Goolsbee is also scheduled before a virtual Wisconsin Bankers Association Midwest Economic Forecast Forum at 11 am ET.
At 2 pm ET, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.
Positive Reaction To Inflation Data May Spark Early Rally On Wall Street
2025-01-15 13:57:54
Slightly Tamer-Than-Expected Inflation Data May Lead To Strength On Wall Street