Stocks gain ground after wholesale inflation eases in US
By DAMIAN J. TROISE
AP Business Writer
NEW YORK (AP) — Stocks rose broadly in midday trading on Wall Street Tuesday after the government reported another decline in the pace of wholesale price inflation last month, the latest glimpse of hope that inflationary pressures in the U.S. might be easing.
The S&P 500 index rose 1.5% as of 11:54 a.m. Eastern. The Dow Jones Industrial Average rose 224 points, or 0.7%, to 33,764 and the Nasdaq rose 2.5%.
Technology stocks and retailers had some of the biggest gains. Apple jumped 3.1%. Walmart surged 7.5% after reporting strong financial results, raising its profit forecast and announcing an opioid settlement.
Prices at the wholesale level rose 8% in October from 12 months earlier, the fourth straight decline. Every measure of the latest inflation report came in cooler than economists expected. The data follows a report last week on consumer prices that also showed inflation continues cooling from its hottest levels in decades, albeit slowly.
“The improvement is simply encouraging,” said Mark Hackett, chief of investment research at Nationwide. “More importantly, what it’s doing is taking universal pessimism and starting to put some holes in that theory.”
Wall Street is closely watching inflation data that could impact how far the Federal Reserve will need to go in restraining the economy to tame inflation. The central bank has raised its key overnight rate by a big 0.75 percentage points at each of its last four meetings. That’s triple the usual amount.
The latest updates on inflation have investors betting that the Fed will raise rates by a half-percentage point at its meeting in December, according to CME Group.
The Fed has been aggressively raising interest rates to make borrowing more difficult and generally slow down spending to cool inflation. The strategy risks slowing economic growth too much and bringing on a recession. That fear has been hovering over Wall Street.
Bond yields, which have been hovering near multidecade highs, eased slightly. The yield on the two-year Treasury fell to 4.36% from 4.37% just before the latest inflation report. The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.81% from 3.83%.
Investors will get more updates on inflation’s impact on businesses and consumers this week with corporate earnings from big retailers. Home Depot rose 2.5% after reporting strong financial results and maintaining its sales growth forecast. Target reports its results on Wednesday and Macy’s reports its results on Thursday.
Wall Street will get a broader update on retail sales Wednesday when the government releases its report for October.
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Joe McDonald and Matt Ott contributed to this report.
