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U.S. stocks extended gains Wednesday, following on from the strongest rally on Wall Street in nearly seven months, as investors bet that slowing inflation pressures will mark the end of Federal Reserve rate hikes amid a so-called 'soft landing' for the world's largest economy.
A modest nudge higher in Treasury bond yields, which snapped-back from the biggest single-decline in months, put a cap on early gains but the S&P 500, which is now up 5.2% for the month, added 15 points in late afternoon trading while the Dow Jones Industrial Average was up 192 points. The tech-focus Nasdaq, which surged 2.37% yesterday to take its November advance to 9.7%, gained 38 points.
Below is a list of the trading day's key benchmarks:
- Target blasted Street earnings forecasts, with shares now on pace for their best single-day gain since 2019.
- Walmart caught its retail rival's tailwind, hitting an all-time high of $169.47 each ahead of its third quarter earnings Thursday.
- October retail sales slipped lower, thanks in part to a big decline in gas prices, but underlying spending trends held firm amid easing inflation pressures.
- Factory gate inflation slowed the most in three years, to an annualized rate of 1.3%, validating the Commerce's Department's October CPI reading from yesterday.
Treasury yield snap-back caps S&P 500 gains
Updated 2:32 PM EST - Martin Baccardax
U.S. President Joe Biden and China President Xi Jinping met face to face for the first time in more than a year at the Asia Pacific Economic Cooperation summit in San Francisco Wednesday.
In opening remarks, Biden stressed the need to focus on climate, trade and technological risks, while Xi said that while there are 'grave' differences between the world's two biggest economies, "the planet is big enough for both of us."
Updated 12:58 PM EST - Martin Baccardax
Benchmark 10-year notes bounced back from yesterday's 20 basis point decline in the wake of the October inflation report, and were last marked 9 basis points higher on the session at 4.545%, while 2-year note yields jumped 7 basis points to 4.925%.
At the same time, however, wagers on a May rate cut are now pegged at 46.7%, with the U.S. dollar index up 0.26% at 104.325.
Updated 11:42 AM EST - Martin Baccardax
Nvidia (NVDA) -) shares look set to snap a 10-day winning streak, the longest since 2016, as investors book profits head of the chipmaker's third quarter earnings next week. The Financial Times also noted that Microsoft (MSFT) -) is launching a new series of AI-focused semiconductors in a challenge to Nvidia's market dominance.
Nvidia was last marked 1.12% lower on the session at $491.05 each, while Microsoft edged 0.1% higher to $369.75 each.
Updated 10:37 AM EST - Martin Baccardax
The Energy Department reported a bigger-than-expected buildup in domestic crude stocks over that past two weeks, with inventories rising by 3.6 million barrels, doubling analysts' estimates.
WTI futures contracts for December delivery were marked $1.05 lower at $77.20 per barrel following the data release, while Brent crude contracts for January fell 80 cents to $81.66 per barrel.
Updated 9:39 AM EST - Martin Baccardax
The S&P 500, which is now up 5.2% for the month, added 18 points, or 0.4%, in the opening minutes of trading while the Dow Jones Industrial Average booked a 120 point advance.
The tech-focus Nasdaq, which surged 2.37% yesterday to take its November advance to 9.7%, was up 73 points.
Updated 8:45 AM EST - Martin Baccardax
Consumers continued to spend in October, although overall retail sales slowed 0.1% to just under $705 billion, the Commerce Department reported Wednesday, thanks in part to a big decline in domestic gas prices.
Related: Retail sales slow, but top Wall Street forecasts, as inflation pressures ease
Factory gate inflation, meanwhile, slowed to an annual rate of 1.3% last month, well south of the Street's 1.9% forecast, validating the easing price pressures reported in the Commerce Department's October CPI report.
Updated 7:57 AM EST - Martin Baccardax
Traders are buzzing over a research note from Goldman Sachs' David Kostin, one of Wall Street's most-respected market strategists, which sees the S&P 500 rising past the 4,700 level by the end of next year, a near 6% gain from current levels.
Kostin cites 'soft landing' prospects, likely Fed rate cuts and improved corporate earnings as powering solid, but slowing, 2024 equity market gains.
Updated 7:02 AM EST - Martin Baccardax
Target (TGT) -) shares are surging after the retailer followed Home Depot (HD) -) with a stronger-than-expected third quarter earnings update, but echoed the home improvement group's hint that holiday sales may slow amid a pullback in higher-item spending. Walmart (WMT) -) reports tomorrow.
Target was last marked 15.15% higher in pre-market trading to indicate an opening bell price of $127.40 each.
Related: Target earnings blast forecasts, but same-store sales slide, theft increases
Updated 6:08 AM EST - Martin Baccardax
Stock futures are adding to early pre-market gains, with a softer-than-expected reading for October inflation in the U.K., as well as a big decline in wholesale prices out of Germany, added to the market's 'peak rate' zeitgeist.
The Commerce's Department's October inflation report showed headline prices rose just 3.3% from last year, down from the 3.7% pace in September, while core pressures eased to a fresh two-year low of 4%, surprising investors and launching a sharp rally for U.S. stocks.
Related: Inflation slows sharply, core at 2-year low; Fed rate cut seen more likely
The S&P 500 surged nearly 2%, notching its best single-day advance since April, while the small-cap Russel 2000 soared 5.44% for its best day since November of last year.
A tamer inflation backdrop, set against an economy that is growing at a 2.1% clip, based on the Atlanta Fed's GDPNow forecasting tool, rising corporate earnings and a resilient job market could all combine to deliver the 'soft landing' policymaker's have been aiming for, where the economy avoids recession but also manages to deliver consumer price stability.
Retail sales data will go a long way towards putting that puzzle together, as will the tail end of the third quarter earnings season and Thursday's weekly jobless claims figures.
Last night's vote on Capitol Hill, which saw the House comfortably pass a stop-gap bill that will avoid a government shutdown later this week and maintain funding at current levels until mid-January, also relieved some headline risk hanging over markets.
Wall Street's broad rally flowed into the Asia session as well, where stocks were also boosted by reports of more than $100 billion of stimulus from Beijing to support the beaten-down property sector, as well as better-than-expected October readings for retail sales and industrial production.
The region-wide MSCI ex-Japan index surged 2.6% into the close of trading, while the Nikkei 225 gained 2.52%.
In Europe, another sharp inflation pullback, this time in the United Kingdom, helped lift the FTSE 100 more than 1% higher in early London trading while the region-wide Stoxx 600 rose 0.47% in Frankfurt.
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