US stocks took another leg higher as markets digested upbeat corporate news and data on producer prices that will keep pressure on the Federal Reserve to tighten policy. Treasuries were steady along with the dollar.
(Bloomberg) — US stocks took another leg higher as markets digested upbeat corporate news and data on producer prices that will keep pressure on the Federal Reserve to tighten policy. Treasuries were steady along with the dollar.
The S&P 500 is attempting to stage a comeback after a five-day losing streak. Consumer staples and health care topped the leaderboard with gains in PepsiCo Inc. and Moderna Inc. The tech-heavy Nasdaq 100 advanced. Treasuries were little changed, with the policy-sensitive two-year yield holding near 4.3%. The dollar gained.
PepsiCo jumped after lifting its forecast for the year on the back of better-than-estimated third-quarter profit. Moderna surged after Merck & Co. said it would exercise an option to work in partnership with the biotech on a messenger RNA cancer vaccine.
Data showed prices paid to US producers rose in September by more than expected ahead of a key measure of consumer inflation due Thursday that’s set to return to a four-decade high.
“Prices remain elevated so it shouldn’t be a surprise to see producer goods and services rise,” Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office, wrote. “No doubt the Fed still has its work cut out for them, and if tomorrow’s CPI read is hot, don’t be surprised to see some investors come to grips with how long the road to tamer inflation may be.”
Read more: Top-Ranked Chartist Says Gaming Out Fed Pivot Is ‘Fool’s Errand’
Comments by Neel Kashkari on Wednesday reaffirmed policy makers’ commitment to the current rate-hike path, with the Minneapolis Fed chief saying the bar for a pivot away from monetary policy tightening is “very high.”
The yield on 30-year gilts rose after the Bank of England confirmed its plan to end emergency bond purchases, but the pound rallied above $1.10. The BOE also signaled interest rates are likely to rise sharply in November and warned that some UK households may face a strain over debt repayments that’s as great as before the 2008 financial crisis.
“The Bank of England is a test case for how hawkish central banks can be without doing damage to financial stability,” said Michael Metcalfe, global head of macro strategy at State Street Global Markets.
Kristina Hooper, chief global market strategist for Invesco, said in a note that while world economy is slowing after rate hikes, there’s yet to be a meaningful decline in inflation.
“This is an extraordinary monetary policy tightening environment and we are waiting to see if something breaks globally,” she said. “The UK has come close.”
Elsewhere, crude fluctuated. OPEC slashed projections for the amount of crude it will need to pump this quarter, while Russia’s President Vladimir Putin said any energy infrastructure in the world is at risk after the explosions on the Nord Stream pipelines.
NATO Secretary General Jens Stoltenberg urged alliance members to step up supplies of air defense systems to Ukraine, condemning Russian strikes. In China, Shanghai is quietly shutting down schools and a raft of other venues as officials try to rein in a flareup that’s hit the financial hub.
Key events this week:
- Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
- FOMC minutes for September meeting, Wednesday
- Fed’s Michelle Bowman and Neel Kashkari speak
- ECB’s Christine Lagarde speaks
- US CPI, initial jobless claims, Thursday
- G-20 finance ministers and central bankers meet, Thursday
- China CPI, PPI, trade, Friday
- US retail sales, business inventories, University of Michigan consumer sentiment, Friday
- BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.3% as of 11:51 a.m. New York time
- The Nasdaq 100 rose 0.5%
- The Dow Jones Industrial Average rose 0.5%
- The Stoxx Europe 600 fell 0.5%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro fell 0.2% to $0.9692
- The British pound rose 1.1% to $1.1088
- The Japanese yen fell 0.7% to 146.94 per dollar
Cryptocurrencies
- Bitcoin rose 0.6% to $19,133.43
- Ether rose 1.3% to $1,298.86
Bonds
- The yield on 10-year Treasuries declined one basis point to 3.93%
- Germany’s 10-year yield advanced five basis points to 2.35%
- Britain’s 10-year yield advanced one basis point to 4.45%
Commodities
- West Texas Intermediate crude fell 2.7% to $86.98 a barrel
- Gold futures fell 0.6% to $1,675.70 an ounce
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