New York – Stocks are gaining ground in early trading on Wall Street, building on a strong start to the year ahead of this week’s highly anticipated update on inflation and corporate earnings reports.
The S&P 500 rose 0.5% after the open Wednesday. The Dow Jones Industrial Average and the Nasdaq also rose. Technology stocks and retailers made solid gains. Bond yields were mixed and crude oil prices rose.
Markets in Asia were mixed overnight and European markets gained ground.
The next potentially market-moving event is Thursday’s consumer inflation report for December. Several big companies, including Bank of America and Delta Air Lines, are scheduled to report earnings on Friday.
U.S. markets have been boosted so far this year by hopes that cooling inflation and a slowing economy may convince the Federal Reserve to ease off its markets-shaking hikes to interest rates. Since early last year, the U.S. central bank has been raising rates at a furious pace to bring painful inflation under control. Such moves risk causing a recession and hurt investment prices.
The next big event for markets is Thursday’s update on consumer inflation for December. Economists expect the report to show price gains slowed further, to 6.5% from 7.1% in November and down from a peak of more than 9% in the summer.
A worse-than-expected reading could dash the building hopes on Wall Street that the Fed may stop its hikes soon and perhaps even cut rates by the end of the year. Some investors see the economy successfully walking the tightrope of slowing enough to snuff out high inflation but not so much as to cause a painful recession.
Past rate increases and high inflation have already hurt economic activity around the world, and the Fed has pledged to keep rates high for a while to ensure the job is done on inflation. It doesn’t envision any rate cuts until 2024.
The World Bank said Tuesday the global economy will come “perilously close” to a recession this year in its annual report.
In Europe at midday, France’s CAC 40 rose 0.8% while German’s DAX added 0.9%. Britain’s FTSE 100 gained 0.6%.
In Asian trading, Japan’s benchmark Nikkei 225 rose 1.0% to finish at 26,446.00. Australia’s S&P/ASX 200 gained 0.9% to 7,195.30. South Korea’s Kospi edged up 1.7% to 2,255.98. Hong Kong’s Hang Seng rose 0.5% to 21,436.05, while the Shanghai Composite added 0.2% to 3,123.52.
Shares of Fast Retailing Co., which operates the popular Japanese Uniqlo clothing retailer, rose 1.4% after the company announced that it was raising the salaries of its workers by up to 40%.
Big U.S. companies will begin showing investors later this week how much profit they made during the last three months of 2022. Hot inflation has been squeezing customers’ wallets and raising costs for businesses, threatening their earnings.
In energy trading, benchmark U.S. crude picked up 54 cents to $75.66 a barrel in electronic trading on the New York Mercantile Exchange. It gained 49 cents to $75.12 a barrel on Tuesday. Brent crude, the international standard, gained 60 cents to $80.70 a barrel.
In currency trading, the U.S. dollar rose to 132.76 Japanese yen from 132.13 yen. The euro was essentially flat at $1.0735.
On Wall Street on Tuesday, the S&P 500 rose 0.7% while the Dow Jones Industrial Average gained 0.6%. The tech-heavy Nasdaq composite climbed 1%.
Kageyama reported from Tokyo; Ott reported from Washington.