Wall Street jumps on more evidence of cooling inflation

  • U.S. producer prices rise less than expected
  • Walmart jumps on strong forecast, other retailers rise
  • Indexes up: Dow 0.90%, S&P 1.40%, Nasdaq 2.03%

Nov 15 (Reuters) – The tech-heavy Nasdaq led Wall Street’s main indexes higher on Tuesday as data providing further proof of cooling inflation boosted bets of smaller interest rate hikes by the Federal Reserve.

The Labor Department’s producer prices index rose 8% in the 12 months through October, lower than an estimated 8.3% rise, according to a Reuters poll of economists.

Excluding volatile food and energy costs, the index rose 5.4% on an annual basis last month after increasing 5.6% in September.

The report follows softer-than-expected consumer prices data late last week, which sparked a massive rally on hopes of a less aggressive monetary policy.

“It (the data) is going to confirm people’s hopes that inflation is starting to turn the corner. It’s going to give the market more confidence,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

Traders increased their bets on a 50-basis point increase in rates by the Fed at its December meeting to 85.4% from 80.6% before the data was released, according to CME Fedwatch tool.

As U.S. Treasury yields fell, shares of megacap tech and other growth stocks such as Apple (AAPL.O), Amazon.com (AMZN.O) and Alphabet (GOOGL.O) rose between 2% and 4%.

Shares of Walmart jumped 6.6% after raising its full-year net sales expectations, with the upbeat outlook boosting shares of other big retailers such as Target Corp (TGT.N) and Macy’s Inc (M.N). The S&P 500 retail (.SPXRT) and consumer discretionary sectors (.SPLRCD) were up more than 2% each.

U.S.-listed shares of Chinese firms including JD.Com , Alibaba Group Holding rose between 7% and 10% after President Joe Biden and Chinese leader Xi Jinping’s meeting on Monday where they pledged more frequent communications.

A clutch of other economic data including on retail sales and housing starts this week as well as comments by several Fed officials will also be parsed by investors as they try to gauge the path of future rate hikes.

At 09:50 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 302.33 points, or 0.90%, at 33,839.03, the S&P 500 (.SPX) was up 55.39 points, or 1.40%, at 4,012.64, and the Nasdaq Composite (.IXIC) was up 227.15 points, or 2.03%, at 11,423.37.

U.S.-listed shares of Taiwan Semiconductor Manufacturing jumped 11.0% after Warren Buffett’s Berkshire Hathaway (BRKa.N) bought more than $4.1 billion of stock in the company.

Shares of Tencent Music Entertainment Corp listed in the U.S. jumped 16% after the Chinese music-streaming firm surpassed third-quarter results estimates.

Netflix (NFLX.O) jumped 2.8% as BofA Global Research reinstated coverage on the streaming giant with “buy”.

Advancing issues outnumbered decliners by a 5.70-to-1 ratio on the NYSE and by a 3.43-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and no new lows, while the Nasdaq recorded 23 new highs and 27 new lows.

Reporting by Shubham Batra, Sruthi Shankar, Amruta Khandekar and Ankika Biswas; additional reporting by Devik Jain; Editing by Shounak Dasgupta and Arun Koyyur

Our Standards: The Thomson Reuters Trust Principles.

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