U.S. stocks rose at the start of trading on Wednesday, as investors considered producer price data that showed a modest increase in inflation last month.
The Dow Jones Industrial Average increased by 0.25% while the S&P 500 increased by around 0.24%. The technologically significant Nasdaq Composite decreased by 0.18%.
The producer price index (PPI), which measures wholesale prices, increased 0.4% in September after declining 0.2% the previous month due to ongoing inflation. Analysts anticipated a 0.2% increase in the headline figure. Prior to Thursday’s eagerly awaited release of the government’s consumer pricing index (CPI) report, the PPI report is released.
“It shouldn’t come as a shock to see producer goods and services go up when prices are still high. Remember that the increase is still less than what we were routinely witnessing month after month earlier this year,” Head of Model Portfolio Construction at Morgan Stanley Global Investment Office, Mike Loewengart, penned the article.
“Without a doubt, the Fed still has a lot of work to do. If tomorrow’s CPI reading is high, don’t be shocked if some investors start to realize how difficult it may be to control inflation.”
The minutes from the most recent monetary policy meeting of the Federal Reserve will be released on Wednesday. Investors will be thinking about authorities’ discussions on the effects of continued tightening on the economy.
“Any anticipation of assistance from the Fed minutes may not materialize, as officials appear to be united in their desire to stop inflation and the commentary is, to some extent, out of date at this time. Even a strong CPI reading tomorrow could not make much of a difference in the immediate future, according” to Craig Erlam, senior market analyst at Oanda.
Analysts are also preparing for this week’s first round of significant corporate earnings reports, which may reveal additional weakness as the effects of ongoing inflation, higher interest rates, and a stronger currency are felt by company bottom lines. PepsiCo reported earnings that were stronger than anticipated, and the company raised its annual revenue and profit projections. Early trading saw a nearly 4% increase in the stock.
Later this week, financial behemoths including BlackRock, JPMorgan Chase, and Morgan Stanley will release earnings reports.
