Wall Street nears record as markets prep for an upcoming inflation report
Wall Street rose Wednesday as traders locked in their final moves ahead of a report on inflation, which could show whether all of the excitement that has vaulted stocks toward records is warranted .
The Standard & Poor’s gained 0.6% to pull to within 0.3% of its all-time high set two years ago. The Dow Jones industrial average added 0.5%, and the Nasdaq composite rose 0.8%.
Intuitive Surgical jumped 10.3% after the maker of robotic surgery systems said it expects to report stronger revenue for the end of 2023 than analysts expected. Homebuilder Lennar climbed 3.5% after it said it would increase its dividend and repurchase up to $5 billion of its own stock.
But the market’s focus is on Thursday, when the U.S. government will release its latest monthly update on inflation at the consumer level. A cooldown there from its peak in the summer of 2022 has raised hopes that the Federal Reserve may cut interest rates sharply this year. That in turn has sent Treasury yields easing in the bond market and stock prices rallying.
Economists expect Thursday’s report to show prices paid by U.S. consumers were 3.2% higher in December than a year earlier, according to FactSet. That would be a slight acceleration from November’s 3.1% inflation rate. But after ignoring the effects of food and fuel prices, which can quickly shift month to month, economists believe underlying inflation trends probably continued to cool.
The rule replaces a Trump-era standard that narrowed the criteria for classifying employees as contractors. Such workers are not guaranteed minimum wages or benefits.
The Fed has noticed the decline in inflation, and it has hinted at possibly cutting interest rates three times this year. That would be a sharp turnaround after it jacked rates dramatically higher in hopes of slowing the economy and hurting investment prices enough to grind down high inflation.
But many traders are anticipating double that number of rate cuts. Critics say that’s overly optimistic and that the Fed is unlikely to cut so many times unless a recession hits. If Thursday’s inflation data come in warmer than expected, it could upend those hopes and shake the market.
The yield on the 10-year Treasury has already slumped well below its perch above 5% in October on strong hopes for rate cuts. It edged a bit higher Wednesday, up to 4.03% from 4.02% late Tuesday.
On Wall Street, Boeing stock stabilized after slumping earlier in the week following the in-flight blowout of one of its planes flying for Alaska Airlines. It rose 0.9%.
WD-40 jumped 15.2% after reporting stronger profit for the latest quarter than analysts expected.
The Securities and Exchange Commission says X post on spot-bitcoin ETF approval was fake. SEC Chair Gary Gensler says that no decision was made Tuesday.
The big companies in the S&P 500 are set to begin reporting their latest quarterly reports on Friday. Delta Air Lines, JPMorgan Chase and UnitedHealth Group will be among that day’s headliners.
Analysts are forecasting that a half-dozen stocks will be responsible for most of the S&P 500’s growth in the last quarter. But trends are improving a bit, according to strategists at Bank of America. They say 66% of companies are expected to report growth in profit, up from 64% in the third quarter.
“While risks remain, fundamentals are improving and analysts sound more optimistic than they did in” the summer, Ohsung Kwon and Savita Subramanian said in a BofA Global Research report.
Some of Wall Street’s heavier losses Wednesday came from stocks of oil-and-gas companies. Exxon Mobil sank 1%, and Devon dropped 1.9%.
Crude prices fell after giving up gains from earlier in the day. A barrel of benchmark U.S. oil dropped 87 cents to $71.37 and is down roughly 3% for the week. Brent crude, the international standard, sank 79 cents to $76.80 per barrel. The price of natural gas also slumped.
All told, the S&P 500 rose 26.95 points to 4,783.45. The Dow gained 170.57 to 37,695.73, and the Nasdaq climbed 111.94 to 14,969.65.
In stock markets abroad, Tokyo’s Nikkei 225 gained 2% to hit its highest level since March 1990 as a weaker yen lifted shares of exporters. Indexes were mostly lower across much of the rest of Asia and Europe.
In cryptocurrencies, bitcoin was swinging around $46,000 shortly after the Securities and Exchange Commission said . it would allow the trading of exchange-traded funds that hold actual bitcoins, instead of just futures contracts related to them.
A new deal between the actors’ union and an AI startup opens the door for performers to make and license “clones” of their voices for video games and other digital projects.
The SEC appeared deeply split over the decision. One commissioner called it an overdue move to give investors the ability to express their thoughts on bitcoin, and another described it as an unsound action that “put us on a wayward path that could further sacrifice investor protection.”
A day earlier, bitcoin swung through a wild ride after the SEC’s account on X, formerly Twitter, said that it had approved such ETFs. Soon after, though, the SEC said no approval had been given and that its account had been compromised.
It’s the latest eye-twitching shenanigan in a corner of the market that SEC Chair Gary Gensler in 2021 called the “Wild West” because it didn’t have enough protections for investors at the time.
AP writers Matt Ott and Zimo Zhong contributed to this report.
