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U.S. Stocks May See Initial Strength Following Inflation Data

wallstreet oct22 12jan22 lt

After turning higher over the course of the previous session, stocks may see further upside in early trading on Wednesday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 156 points.

The futures have shown a positive reaction to the Labor Department's highly anticipated report on consumer price inflation in December.

While the report showed the annual rate of consumer price growth once again reached the highest level in almost 40 years, traders seem relieved the acceleration was not even more significant.

The report showed the annual rate of consumer price growth accelerated to 7.0 percent in December from 6.8 percent in November, showing the biggest yearly jump since June of 1982.

Core consumer prices, which exclude food and energy prices, were up by 5.5 percent year-over-year in December compared to the 4.9 percent spike in November. The annual growth reflected the biggest surge since February of 1991.

The continued acceleration in the annual rate of consumer price growth came as prices increased by slightly more than expected on a monthly basis.

Treasury yields have moved to the downside following the release of the report, which may offset some of the interest rate concerns that dragged the markets lower to start the year.

Later in the day, the Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.

After moving to the downside early in the session, stocks showed a significant turnaround over the course of the trading day on Tuesday. The major averages extended the recovery seen on Monday, with the tech-heavy Nasdaq posting a particularly strong gain.

The major averages moved roughly sideways going into the close, hovering in positive territory. While the Nasdaq surged 210.62 points or 1.4 percent at 15,153.45, the S&P 500 advanced 42.78 points or 0.9 percent to 4,713.07 and the Dow rose 183.15 points or 0.5 percent at 36,252.02.

In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Wednesday. Japan's Nikkei 225 Index jumped by 1.9 percent, while Hong Kong's Hang Seng Index spiked by 2.8 percent.

The major European markets have also moved to the upside on the day. While the U.K.'s FTSE 100 Index has advanced by 0.8 percent, the French CAC 40 Index is up by 0.5 percent and the German DAX Index is up by 0.4 percent.

In commodities trading, crude oil futures are climbing $0.86 to $82.08 a barrel after spiking $2.99 to $81.22 a barrel a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,818.70, up $0.20 compared to the previous session's close of $1,818.50. On Tuesday, gold jumped $19.70.

On the currency front, the U.S. dollar is trading at 115.19 yen compared to the 115.30 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1398 compared to yesterday's $1.1367.

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