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U.S. stocks closed higher on Tuesday in a choppy session. Investor mood was upbeat as further data emerged showing softer-than-expected inflation for October. However, geopolitical developments in the Ukraine War kept market participants on tenterhooks. All three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.2% or 56.22 points to end at 33,592.92 points. Eighteen components of the 30-stock index ended in the positive territory, while 12 ended in the negative.
The S&P 500 gained 0.9% or 34.48 points to close at 3,991.73 points. Nine of the 11 broad sectors of the benchmark index ended in positive territory. The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Real Estate Select Sector SPDR (XLRE) increased 1.5%, 1.4% and 1.3%, respectively, while the Materials Select Sector SPDR (XLB) lost 0.2%.
The tech-heavy Nasdaq advanced 1.5% or 162.19 points to finish at 11,358.41 points.
The fear-gauge CBOE Volatility Index (VIX) increased 3.4% to 24.54. A total of 13.1 billion shares were traded on Tuesday, higher than the last 20-session average of 12.2 billion. Advancers outnumbered decliners on the NYSE by a 3.25-to-1 ratio. On Nasdaq, a 2.01-to-1 ratio favored the advancers.
Producer Price Index Comes in Below Expectations
Producer Price Index (PPI) increased less than expected in October, with services falling for the first time in nearly two years. PPI for final demand rose 0.2% in October, and the number for September was revised down to 0.2%. Excluding food and energy, core inflation dipped 0.1%. This was the first decrease in the core numbers since May 2020 and follows an unchanged reading in September. Investors are interpreting this as further evidence that inflation is starting to subside, and had almost definitely peaked in June.
Market participants are betting that this report, which follows the encouraging CPI report released last week, would push the Fed into inferring that its tight monetary measures are finally showing solid results, and that the time may have come for them to go slow on their pace of rate hikes. There is a wide consensus that the Fed would opt for a 50 bps rate hike, ending its streak 75 bps hikes in its December meeting.
In recent months, investors have remained apprehensive that a hawkish Fed might be unable to achieve a soft landing of the economy as it has been ruthlessly raising interest rates to curb inflation. In such a scenario, the inflation numbers that have emerged this month are good news for the market as they might force the Fed to rethink.
However, despite this fourth straight month of PPI reading, it must be noted that inflation has previously shown signs of cooling only to heat up again. It might take a few months of consistent dips to convince the Fed to stop raising rates altogether. In this volatile market, however, stocks did well on the report.
Retail Giants have been posting their quarterly earnings this week and have performed above expectations, driving the Consumer Discretionaries sector to do well
Two civilians were killed in an explosion in a grain-drying facility in Przewodow, a village in eastern Poland near the Ukraine border. Media reports have emerged that the blast was due to Russian missiles crossing into Poland, but the Pentagon said it could not confirm that account. The State Department, however, said the report was "incredibly concerning."
Other NATO allies have mentioned that the situation was alarming and that they were investigating the matter. According to Piotr Muller, a spokesperson for the Polish government, Poland is increasing the readiness of some military units and determining whether to request consultations with allies under Article 4 of the NATO treaty. The Polish President Andrzej Duda has been in consultation with president Biden.
Perceiving this as a possible escalation of the Russia-Ukraine War, stocks pulled back around mid-day, with the Dow turning negative, before a late-session rebound.
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Stock Market News for Nov 16, 2022
U.S. stocks closed higher on Tuesday in a choppy session. Investor mood was upbeat as further data emerged showing softer-than-expected inflation for October. However, geopolitical developments in the Ukraine War kept market participants on tenterhooks. All three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.2% or 56.22 points to end at 33,592.92 points. Eighteen components of the 30-stock index ended in the positive territory, while 12 ended in the negative.
The S&P 500 gained 0.9% or 34.48 points to close at 3,991.73 points. Nine of the 11 broad sectors of the benchmark index ended in positive territory. The Communication Services Select Sector SPDR (XLC), the Consumer Discretionary Select Sector SPDR (XLY) and the Real Estate Select Sector SPDR (XLRE) increased 1.5%, 1.4% and 1.3%, respectively, while the Materials Select Sector SPDR (XLB) lost 0.2%.
The tech-heavy Nasdaq advanced 1.5% or 162.19 points to finish at 11,358.41 points.
The fear-gauge CBOE Volatility Index (VIX) increased 3.4% to 24.54. A total of 13.1 billion shares were traded on Tuesday, higher than the last 20-session average of 12.2 billion. Advancers outnumbered decliners on the NYSE by a 3.25-to-1 ratio. On Nasdaq, a 2.01-to-1 ratio favored the advancers.
Producer Price Index Comes in Below Expectations
Producer Price Index (PPI) increased less than expected in October, with services falling for the first time in nearly two years. PPI for final demand rose 0.2% in October, and the number for September was revised down to 0.2%. Excluding food and energy, core inflation dipped 0.1%. This was the first decrease in the core numbers since May 2020 and follows an unchanged reading in September. Investors are interpreting this as further evidence that inflation is starting to subside, and had almost definitely peaked in June.
Market participants are betting that this report, which follows the encouraging CPI report released last week, would push the Fed into inferring that its tight monetary measures are finally showing solid results, and that the time may have come for them to go slow on their pace of rate hikes. There is a wide consensus that the Fed would opt for a 50 bps rate hike, ending its streak 75 bps hikes in its December meeting.
In recent months, investors have remained apprehensive that a hawkish Fed might be unable to achieve a soft landing of the economy as it has been ruthlessly raising interest rates to curb inflation. In such a scenario, the inflation numbers that have emerged this month are good news for the market as they might force the Fed to rethink.
However, despite this fourth straight month of PPI reading, it must be noted that inflation has previously shown signs of cooling only to heat up again. It might take a few months of consistent dips to convince the Fed to stop raising rates altogether. In this volatile market, however, stocks did well on the report.
Retail Giants have been posting their quarterly earnings this week and have performed above expectations, driving the Consumer Discretionaries sector to do well
Consequently, shares of Carnival Corporation & plc (CCL - Free Report) and Walmart Inc. (WMT - Free Report) gained 5.3% and 6.5%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Explosion In Poland Makes Investors Nervous
Two civilians were killed in an explosion in a grain-drying facility in Przewodow, a village in eastern Poland near the Ukraine border. Media reports have emerged that the blast was due to Russian missiles crossing into Poland, but the Pentagon said it could not confirm that account. The State Department, however, said the report was "incredibly concerning."
Other NATO allies have mentioned that the situation was alarming and that they were investigating the matter. According to Piotr Muller, a spokesperson for the Polish government, Poland is increasing the readiness of some military units and determining whether to request consultations with allies under Article 4 of the NATO treaty. The Polish President Andrzej Duda has been in consultation with president Biden.
Perceiving this as a possible escalation of the Russia-Ukraine War, stocks pulled back around mid-day, with the Dow turning negative, before a late-session rebound.