U.S. Stocks Advance As Traders Seem Relieved Inflation Was Not Worse

wallstreet sept12 12jan22 lt

Stocks have moved mostly higher in morning trading on Wednesday, extending the notable upward move seen over the course of the previous session. The major averages continue to offset the pullback seen to start the New Year.

Currently, the major averages are all in positive territory, with the tech-heavy Nasdaq posting another standout gain. While the Nasdaq is up 149.20 points or 1 percent at 15,302.65, the S&P 500 is up 30.07 points or 0.6 percent at 4,743.14 and the Dow is up 114.00 points or 0.3 percent at 36,366.02.

The continued strength on Wall Street comes following the release of 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, although the pace of growth slowed from November.

Treasury yields have moved to the downside following the release of the report, offsetting 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.

Steel stocks are seeing substantial strength following data showing easing Chinese inflation, with the NYSE Arca Steel Index jumping by 2.4 percent to its best intraday level in almost four months.

Substantial strength has also emerged among software stocks, as reflected by the 1.8 percent gain being posted by the Dow Jones U.S. Software Index.

Semiconductors tocks are also turning in a strong performance in morning trading, driving the Philadelphia Semiconductor Index up by 1.6 percent.

Housing and natural gas stocks have also moved to the upside on the day, while a steep drop by Biogen (BIIB) is weighing on the biotechnology sector.

Biogen has come under pressure after Medicare said it would only cover treatment with the biotechnology company's Alzheimer's treatment Aduhelm if patients were enrolled in a clinical trial.

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 German DAX Index has risen by 0.6 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index are both up by 0.9 percent.

In the bond market, treasuries are seeing modest strength, extending the rebound seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.6 basis points at 1.730 percent.

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