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Wall St teeters to a higher close as a Fed rate hike looms

Wall St teeters to a higher close as a Fed rate hike looms
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  • The market sees a 22% chance of a 100bp rate hike by the Fed -CME
  • Rail shares fall amid talks to avoid strike
  • Rising Indices: Dow 0.10%, S&P 0.34%, Nasdaq 0.74%

NEW YORK, Sept 14 (Reuters) – Wall Street closed a directionless session higher on Wednesday as an on-target inflation report largely halted the flow of Tuesday’s sell-off and investors hit the “pause” button. “.

All three indices fluctuated throughout the day but ultimately ended in positive territory. None of them managed to significantly make up the ground lost in Tuesday’s carnage, which triggered their biggest percentage drop in more than two years.

“Today is a day to lick your wounds, after taking body shots yesterday,” said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. “It’s a rest day and that’s kind of a welcome sign.”

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Producer price (PPI) data from the Labor Department landed near consensus estimates and provided some relief after Tuesday’s market-shaking CPI print, which came in more positive than expected. read more

“The inflation debate continues and yesterday was a stark reminder that this is an uphill battle and that the Fed must remain aggressive to put a cap on the broad-based inflation prices we are seeing,” Detrick added.

The PPI report offered assurances that inflation is, in fact, on a slow and downward trajectory.

Inflation

But it still has a long way to go before it gets anywhere near the Fed’s 2% average annual inflation target, and while financial markets have fully priced in an interest rate hike of at least 75 basis points at concluding the FOMC policy meeting next week, they see a 22% chance of a whopping 100 basis point increase, according to CME’s FedWatch tool.

Two-year US Treasury yields, reflecting interest rate expectations, extended Tuesday’s rise.

The size and duration of further interest rate hikes ahead have many market watchers concerned about the lagging effects of the Fed’s tightening phase, with some seeing a recession as inevitable.

A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York, U.S., September 13, 2022. REUTERS/Andrew Kelly

the transport sector (.DJT)Seen as a barometer of economic health and a glimpse of the supply side of the inflation picture, it was weighed down by rail actions in the face of a possible strike.

“Does the White House really want to shut down the rails and further impact supply chains, with the midterm elections less than two months away?” Detrick asked. “We’re optimistic that they can keep the rails open.”

Union Pacific rail operators (UNP.N)south norfolk (NSC.N) and CSX Corp. (CSX.O) it lost 3.7%, 2.2% and 1.0% respectively, even as Labor Secretary Marty Walsh met with union representatives in Washington in talks aimed at averting a rail closure. read more

The Dow Jones Industrial Average (.DJI) rose 30.12 points, or 0.1%, to 31,135.09, the S&P 500 (.SPX) gained 13.32 points, or 0.34%, to 3,946.01 and the Nasdaq Composite (.IXIC) it added 86.10 points, or 0.74%, to 11,719.68.

Six of the 11 major S&P 500 sectors advanced, with energy stocks (.SPNY) leading the winners with the help of rising crude prices on supply concerns.

starbucks corporation (SBUX.O) shares rose 5.5% after the company upgraded its three-year earnings and sales outlook. read more

tesla inc (TSLA.O) recovered from Tuesday’s slump, advancing 3.6% on the same day President Joe Biden announced $900 million in funding for electric vehicle charging stations. read more

Advancing issues outnumbered declining issues on the New York Stock Exchange by a ratio of 1.05 to 1; on the Nasdaq, a ratio of 1.06 to 1 favored decliners.

The S&P 500 posted 2 new 52-week highs and 30 new lows; The Nasdaq Composite posted 26 new highs and 219 new lows.

Volume on US stocks was 10.9 billion shares, compared with the average of 10.33 billion over the past 20 trading days.

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Reporting by Stephen Culp in New York Additional reporting by Ankika Biswas, Devik Jain and Sruthi Shankar in Bangalore Editing by Matthew Lewis

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