Stocks saw moderate strength on Wednesday amid reassurances from the day's producer price data and yesterday's interest rate announcement that inflation remains subdued. The major averages ended the day firmly in positive territory, reaching their best closing levels in over a year. The Dow gained more than 47 points, closing higher for the seventh straight session.
Before the start of trading this morning, the markets were presented with data from the Labor Department showing that the producer price index fell by 0.6 percent in February, following an unrevised 1.4 percent increase in January. Economists had been expecting a more modest decrease in prices of about 0.2 percent.
With the notable decrease, producer prices fell for the first time since a 0.5 percent decrease in September of 2009 and showed the steepest drop since a 1.2 percent decrease in July of 2009.
Excluding a steep drop in energy prices as well as a modest increase in food prices, the core producer price index edged up by 0.1 percent in February after rising by 0.3 percent in January. The modest increase in core prices came in line with economist estimates.
Traders also looked to Capitol Hill, where Federal Reserve Chairman Ben Bernanke and former Fed chief Paul Volcker discussed the Fed's role in financial regulation before the House Financial Services Committee.
Bernanke stated that there is no other agency that could replicate the "breadth and depth of relevant expertise" that the central bank has in its regulation of the nation's banks and its analysis of systemic risks.
The Fed chief also said that the Fed is uniquely suited to supervise large financial organizations and added that its involvement in regulation of banks enhances its ability to carry out its duties.
In other news from the Hill today, the Senate approved a $17.6 billion job creation bill, sending it to President Barack Obama, who is expected to sign it into law.
Under the bill, employers will be exempt from Social Security payroll taxes for every worker hired after February 3, 2010 and before January 1, 2011 if they had previously been unemployed for at least 60 days. Businesses that spend money on capital investments will also see an extension of a tax break.
On the corporate front today, video-rental chain Blockbuster Inc. (BBI) revealed that it is in talks with Hollywood studios to reduce DVD costs and may need to file for Chapter 11 bankruptcy protection.
The major averages ended the day well off their best levels, but they still posted notable gains. The Dow advanced by 47.69 points or 0.5 percent to 10,733.67, the Nasdaq closed up 11.08 points or 0.5 percent at 2,389.09 and the S&P 500 rose by 6.75 points or 0.6 percent to 1,166.21.
In overseas trading, stock markets across the Asia-Pacific region closed higher on Wednesday. Japan's benchmark Nikkei 225 Index gained 1.2 percent, while Hong Kong's Hang Seng Index rose by 1.7 percent.
The major European markets also finished on the upside. The U.K.'s FTSE 100 Index and the French CAC 40 Index gained 0.4 percent and 0.5 percent, respectively, while the German DAX Index rose by 0.9 percent.
In the bond markets, treasuries were able to eke out modest gains. Subsequently, the yield on the benchmark ten-year note closed at 3.642 percent, falling by 1.1 basis points on the day.
Banking stocks turned in some of the day's strongest performances, with the Kbw Bank Index rising by 1.7 percent. The advance propelled the index to a sixteen-month closing high.
Housing stocks also saw significant upside, resulting in a 1.6 percent gain by the Philadelphia Housing Sector Index. With the upward move, the index ended the session at its best closing level in six months.
Buying interest also helped the commercial real estate sector to a strong finish, with the Morgan Stanley REIT Index climbing by 1.3 percent on the day. The index ended the session at its highest closing level in seventeen months.
Shares of Felcor Lodging (FCH) boosted the index, posting a gain of 3.7 percent. The increase helped the stock to close at a six-month high.
Oil, semiconductor, and networking stocks also closed notably higher on the day, while airline stocks came under pressure. The NYSE Arca Airline Index slid by 1.2 percent, falling further from a recent two-year high.
Thursday, all eyes will be on the weekly jobless claims report and consumer price data, with concern brewing in the markets over high unemployment coupled with the prospect of rising inflation.
A report on leading economic indicators and the Philadelphia business activity barometer are also likely to garner market attention.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.