Saturday, December 10

Wall St struggles to stay higher on rate-hike worries; Fed minutes awaited


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US stocks crept higher on Wednesday, struggling through fresh concerns over rising inflation and borrowing costs following a surprise rise in September producer prices and ahead of minutes from the Federal Reserve’s last meeting.

The Labor Department’s producer prices index rose 8.5% in the 12 months through September, slightly higher than an estimated 8.4% rise. The reading was still lower than an 8.7% increase in August.

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After five days of selloff, the S&P 500 and the Nasdaq were trading higher even though there are mounting fears that aggressive rate hikes by the Fed could tip the world’s largest economy into a recession.

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“It’s stubborn and some people are hoping that we had peak inflation and it’s going to come down quickly,” said Joe Saluzzi, partner at Themis Trading in Chatham, New Jersey.

“It is not going to be that way. That’s what the Fed has been looking at and that’s why they’re raising rates the way they are. This will take time and this is not going to be a quick thing.”

In the afternoon, investors will scrutinize the Fed’s September meeting minutes for more clarity on the central bank’s rate hike trajectory. Money markets are pricing in a 92% chance of another 75-basis-point hike in November.

“The thing we’re looking for from the FOMC is some evidence that it is open-minded, that they will consider being a lot more flexible,” said Hugh Johnson, chief economist of Hugh Johnson Economics at Albany, New York.

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“The comments are going to be just as hawkish as they have been.”

Investors also await the highly-anticipated consumer prices report on Thursday, which is expected to have picked up in September.

At 12:35 pm ET, the Dow Jones Industrial Average was up 108.35 points, or 0.37%, at 29,347.54, the S&P 500 was up 4.96 points, or 0.14%, at 3,593.80, and the Nasdaq Composite was up 3.87 points, or 0.04 %, at 10,430.06.

Chip shares including Nvidia Corp, Qualcomm Inc Micron Technology Inc, Advanced Micro Devices and Intel Corp were mixed.

The United States is scrambling to tackle unintended consequences of its new export curbs on China’s chip industry that could inadvertently harm the semiconductor supply chain.

The Biden administration has allowed at least two non-Chinese chipmakers operating in China to receive restricted goods and services without their suppliers seeking licenses, the report said.

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PepsiCo Inc gained 4.45% after the soft-drinks maker raised its annual revenue and profit forecasts on firm demand for its sodas and snacks despite multiple price increases.

Boeing Co slipped 1.84% after Credit Suisse started its coverage on the planemaker with an “underperform” rating and Street low price target.

Aluminum producer Alcoa Corp inched up 2.11% following a media report that the United States is considering a complete ban on Russian aluminum in response to Moscow’s military escalation in Ukraine.

Declining issues outnumbered advancers for a 1.45-to-1 ratio on the NYSE and advancers for a 1.22-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week high and 65 new lows, while the Nasdaq recorded 10 new highs and 354 new lows. (Reporting by Ankika Biswas, Shreyashi Sanyal & Bansari Mayur Kamdar in Bengaluru; Editing by Anil D’Silva and Arun Koyyur)

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financialpost.com