U.S. stock futures ticked higher Wednesday, as traders tried to extend a strong rally from the previous session on the back of more encouraging inflation data. Wall Street also had its eyes on Washington as lawmakers tried to avoid a government shutdown. Futures tied to the S&P 500 rose 0.3%. Dow Jones Industrial Average futures climbed 76 points, or 0.2%, while Nasdaq 100 futures also advanced 0.5%. October’s producer price index, which measures wholesale prices, fell by 0.5% to mark its biggest monthly drop since April 2020. Not all of the economic data was positive, however, since retail sales also declined. The S&P 500 climbed 1.9%, while the Nasdaq Composite popped about 2.4% higher. It was the best day since April for both indexes. The 30-stock Dow added nearly 490 points, or 1.4%. These gains came after October’s consumer price index, a key inflation metric, came in lower than the 0.1% increase economists surveyed by Dow Jones had expected. Instead, the CPI came in flat on a monthly basis. Investors celebrated the news, sending stocks soaring on the hopes that the Federal Reserve could finally put an end to its rate-hiking campaign. “The CPI report did basically everything that the market needed to do, which is to confirm disinflationary trend, cooling economy and ultimately put the final pin in the case for the Fed popping [interest rates] again in December,” said Ross Mayfield, investment strategy analyst at Baird. Mayfield added that he doesn’t believe the U.S. central bank will cut rates anytime in the near term, since the housing market remains strong at the moment. The gains in U.S. futures were led by shares of Target, which popped 13% on better-than-expected results for the third quarter. Late Tuesday, the House of Representatives passed a bill to avert a government shutdown. The measure will go to the Senate for a vote. If cleared by lawmakers, the legislation goes to President Joe Biden. Without a funding bill, the federal government is slated to shut down at the end of the week. U.S. Treasury yields were higher on Wednesday, recovering some of their losses from the previous session, as investors digested inflation data that suggested the Federal Reserve may be done raising rates. The 2-year Treasury yield was up 7 basis points at 4.889%, after dropping by as many as 21 basis points on Tuesday. The benchmark 10-year Treasury climbed more than 6 basis points to 4.506%. It had lost 18 basis points to tumble below the 4.5% mark on Tuesday. Hong Kong stocks led Asia-Pacific markets higher Wednesday after upbeat economic data from China. A soft U.S. inflation reading also boosted hopes of the Federal Reserve nearing the end of its interest rate-hiking cycle. Beijing reported better-than-expected retail sales and industrial data for October. Retail sales grew by 7.6% last month from a year ago, above the 7% growth forecast by a Reuters poll. Industrial production rose 4.6% year-on-year in October, faster than the 4.4% pace predicted by the Reuters poll. U.S. CPI was flat in October, against economists expectations of 0.1% rise month over month. Data showed Japan’s economy shrank during the third quarter for the first time in four quarters, amid slowing global demand and rising domestic inflation. Japan’s provisional gross domestic product fell 2.1% in the third quarter compared to a year ago, against a Reuters poll estimate of a 0.6% decline. Hong Kong’s Hang Seng index jumped 3.77% to its highest level in over one week, while the Hang Seng Tech index surged 4.28%. Mainland China’s CSI 300 index advanced 0.70%, rising for the second day to close at 3,607.25. Japan’s Nikkei 225 closed 2.52% higher at 33,519.70. The Topix rose 1.19% to 2,373.22 to end at its highest level in nearly two months. South Korea’s Kospi added 2.20% to close at 2,486.67, and the Kosdaq gained 1.91% at 809.36. In Australia, the S&P/ASX 200 closed 1.42% to an eight-week high at 7,105.90. Oil prices dipped on Wednesday amid signs the United States, the world’s biggest oil producer, is at peak production, offsetting positive crude demand signals from top consumer China. Brent futures were down 29 cents to $82.18 a barrel, while U.S. West Texas Intermediate crude was down 32 cents to $77.94. Gold prices rose to a more than one-week high on Wednesday as the U.S. dollar and Treasury yields weakened after cooler inflation data boosted bets that a U.S rate cut might come sooner than earlier priced in by investors. Spot gold rose 0.4% to $1,970.45 per ounce at 1224 GMT, after earlier touching its highest since Nov. 7. U.S. gold futures also gained 0.4% to $1,974.70.
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