U.S. Stocks Extend Upward Move As Treasury Yields See Further Downside

Stocks fluctuated over the course of the trading session on Wednesday but managed to end the day mostly higher. With the upward move, the major averages all closed higher for the fourth consecutive session.

The major averages moved to the upside going into the close, ending the session near their best levels of the day. The Nasdaq advanced 96.83 points or 0.7 percent to 13,659.68, the S&P 500 climbed 18.71 points or 0.4 percent to 4,376.95 and the Dow rose 65.57 points or 0.2 percent to 33,804.87.

The higher close on Wall Street came amid a continued decline by treasury yields, with yields pulling back further off their highest levels in over sixteen years.

Treasuries have recently benefited from their appeal as a safe haven amid the deadly conflict between Hamas and Israel.

Meanwhile, traders largely shrugged off a Labor Department report showing producer prices in the U.S. increased by slightly more than expected in the month of September.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in September after advancing by 0.7 percent in August. Economists had expected prices to rise by 0.4 percent.

The producer price growth was partly due to a continued surge in energy prices, which spiked by 3.3 percent in September after skyrocketing by 10.3 percent in August.

The report also said the annual rate of producer price growth accelerated to 2.2 percent in September from a revised 2.0 percent in August.

Economists had expected the pace of price growth to come in unchanged compared to the 1.6 percent originally reported for the previous month.

“Officials are committed to reigning in inflation, but we expect prices to slow enough over the coming quarters to keep additional rate hikes off the table,” said Matthew Martin, U.S. Economist at Oxford Economics.

On Thursday, the Labor Department is scheduled to release its more closely watched report on consumer price inflation in the month of September.

The Federal Reserve also released the minutes of its latest monetary policy meeting on Wednesday, reiterating that a majority of participants expect one more interest rate hike will likely be appropriate.

The projections provided following the meeting forecast one more rate hike before the end of the year, although the minutes noted some officials judged it likely that no further increases would be warranted.

“All participants agreed that the Committee was in a position to proceed carefully and that policy decisions at every meeting would continue to be based on the totality of incoming information and its implications for the economic outlook as well as the balance of risks,” the Fed said.

At the same time, the minutes said all participants agreed that policy should remain restrictive for some time until the Fed is confident that inflation is moving down sustainably toward its 2 percent objective.

Sector News

Gold stocks turned in a strong performance on the day, resulting in a 2.3 percent jump by the NYSE Arca Gold Bugs Index.

The strength among gold stocks came amid an increase by the price of the precious metal, with gold for December delivery climbing $12 to $1,887.30 an ounce.

Interest rate-sensitive commercial real estate and housing stocks also saw considerable strength, driving the Dow Jones U.S. Real Estate Index and the Philadelphia Housing Sector Index up by 1.8 percent and 1.6 percent, respectively.

Pharmaceutical, computer hardware and utilities stocks also moved notably higher on the day, while networking stocks showed a significant move to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index advanced by 0.6 percent, while Hong Kong’s Hang Seng Index jumped by 1.3 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index rose by 0.2 percent, the U.K.’s FTSE 100 Index edged down by 0.1 percent and the French CAC 40 Index fell by 0.4 percent.

In the bond market, treasuries extended the significant rebound seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.0 basis points to 4.595 percent.

Looking Ahead

Trading on Thursday is likely to be driven by reaction to the report on consumer price inflation, while the weekly jobless claims data may also attract some attention.

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