U.S. Stocks Likely To See Early Rally Following Another Tamer-Than-Expected Inflation Report

wallstreet nov01 15nov22 lt

After finishing yesterday's volatile session mostly lower, stocks are likely to show a strong move back to the upside in early trading on Tuesday. The major index futures are currently pointing to a sharply higher open for the markets, with the Dow futures jumping by 388 points.

The futures surged following the release of a Labor Department report showing producer prices in the U.S. crept up by much less than expected in the month of October.

The Labor Department said its producer price index for final demand inched up by 0.2 percent in October, matching a revised uptick in September.

Economists expected producer prices to climb by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.

The report also showed the annual rate of producer price growth slowed to 8.0 percent in October from 8.4 percent in September. The year-over-year growth was expected to edge down to 8.3 percent.

Following last week's tamer-than-expected consumer price inflation report, the data is likely to add to optimism about the Federal Reserve slowing the pace of interest rate hikes as soon as next month.

The markets may also benefit from a surge by shares of Walmart (WMT), with the retail giant spiking by 7.3 percent in pre-market trading.

The jump by Walmart comes after the company reported better than expected third quarter results and announced a $20 billion share buyback.

Following the substantial upward move seen last week, stocks fluctuated over the course of the trading session on Monday. The major averages bounced back and forth across the unchanged line before eventually closing in negative territory.

The major averages came under pressure going into the close, ending the session near their worst levels of the day. The Dow slid 211.16 points or 0.6 percent to 33,536.70, the Nasdaq tumbled 127.11 points or 1.1 percent to 11,196.22 and the S&P 500 slumped 35.68 points or 0.9 percent to 3,957.25.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index inched up by 0.1 percent, while China's Shanghai Composite Index jumped by 1.6 percent and Hong Kong's Hang Seng Index spiked by 4.1 percent.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index has climbed by 0.6 percent, the German DAX Index is up by 0.2 percent and the U.K.'s FTSE 100 Index is up by 0.1 percent.

In commodities trading, crude oil futures are falling $0.44 to $85.43 a barrel after plunging $3.09 to $85.87 a barrel on Monday. Meanwhile, after rising $7.50 to $1,776.90 an ounce in the previous session, gold futures are climbing $10.90 to $1,787.80 an ounce.

On the currency front, the U.S. dollar is trading at 138.35 yen compared to the 139.89 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0439 compared to yesterday's $1.0327.

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