Wall Street closed higher on Wednesday as investors mostly put a halt to Tuesday’s sell-off due to an accurate inflation report.
All three indices fluctuated during the day but finished in the positive. The carnage on Tuesday caused their biggest percentage drops in more than two years, and none of them were able to make up any of the ground they lost.
In the wake of Tuesday’s market-shaking CPI print, which came in hotter than anticipated, the Labor Department’s producer pricing (PPI) data, which came in close to consensus predictions, offered some solace.
The PPI report provided reassurance that inflation is, in fact, trending slowly lower.
Although financial markets have fully priced in an interest rate increase of at least 75 basis points at the conclusion of the FOMC’s policy meeting next week, they see a 28% likelihood of a super-sized, 100 basis-point increase, according to CME’s FedWatch tool. However, there is still a long way to go before it reaches the Federal Reserve’s average annual 2% inflation target.
The increase on Tuesday was continued by two-year U.S. Treasury yields, which indicate expectations for interest rates.
Many market experts are worried about the trailing effects of the Fed’s tightening phase due to the amount and duration of upcoming interest rate hikes; others believe a recession is inevitable.
Rail stocks in the face of a prospective strike weighed on the transportation sector, which is regarded as a barometer of economic health and which offers a view into the supply side of the inflation picture.
Even as Labor Secretary Marty Walsh met with union representatives in Washington for talks aimed at averting a rail shutdown, shares of railroad operators Union Pacific, Norfolk Southern, and CSX Corp. all decreased.
The S&P 500 increased by 13.80 points, or 0.35%, to close at 3,946.49 points, while the Nasdaq Composite increased by 90.58 points, or 0.78%, to close at 11,724.15. To reach 31,137.79, the Dow Jones Industrial Average increased by 37.56 points, or 0.11%.
Energy stocks saw the largest percentage gains out of the S&P 500’s 11 major industries, helped by increased crude prices due to supply shortage worries.
