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Sunday, December 4, 2022

Dow rises 200 points after another report hints that inflation could be slowing

The Fed could pause its interest rate hikes right now, says Wharton's Jeremy Siegel

Stocks rose Tuesday after another report signaled that inflation could be slowing, reigniting a rally in equities.

The Dow Jones Industrial Average rose 266 points, or 0.8%. The S&P 500 added 1.4% and the Nasdaq Composite gained 2.2%.

The producer price index, a measure of wholesale inflation, rose 0.2% for the month of October, versus the consensus estimate for a 0.4% increase from Dow Jones. The report comes after last week’s consumer price index data showed signs of inflationary pressure abating last month, sparking a sharp rally.

“The PPI read certainly adds more fuel to the fire for those who feel we may finally be on a downward inflation trend,” said said Mike Loewengart, head of model portfolio construction at Morgan Stanley’s Global Investment Office. “The market embraced last week’s consumer downtick and today’s initial reaction seems to be more of the same.”

“We should all keep in mind that Fed speak is pretty disparate at the moment and you can get a hawkish or dovish point of view depending on which official you ask,” he added.

Stocks are higher for the third day in the last four and all of the major averages are on pace for monthly gains. The Dow is up 3.2% for the month of November. The S&P and Nasdaq have gained 3.6% and 4.1%, respectively.

Elsewhere, Walmart shares jumped after the company beat Wall Street earnings and revenue estimates and boosted full-year guidance. Home Depot reported strong results too but kept guidance in place for the full-year. Its shares rose slightly.

Taiwan Semiconductor, Louisiana-Pacific and Paramount also jumped after regulatory filings showed that Warren Buffett’s Berkshire Hathaway had bought new positions in the first two, and raised its stake in the last.

Earnings season continues this week with retail reports from Target, Lowe’s, Bath and Body Works, Macy’s, Kohl’s and Foot Locker on deck.

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